Fearing Social Security insolvency? iGen could be coming to the rescue
Posted On May 24, 2019
We all know about the danger that the sheer size of the retiring Baby Boomer generation poses to many social programs set up to ease their golden years. Forecasting the date of the ultimate demise of Social Security and Medicare is almost a cottage industry.
But there may be good news on the horizon. And its name is iGen.
According to a recent report from Morgan Stanley Research, the ushering of iGen, or Generation Z as some call it, into the workforce bodes for a brighter economic outlook in the coming decades than previously thought.
The iGen generation, born roughly between 1997 and 2012, is expected to overtake millennials in the workforce by the year 2034, peaking around 78 million. Combined with the millennials, this “youth jolt” should boost productivity, income, consumer spending and the housing market.
The Morgan Stanley study found that workforce gains could be even stronger than the 0.3% to 0.5% projected by the Congressional Budget Office in the latter half of the next decade and beyond. And so, therefore, would be the effects.
“The CBO projections understate potential labor-force growth by 0.2 to 0.3% per year in the 15 years through 2040,” said Morgan Stanley Chief U.S. Economist Ellen Zentner. “We concluded that the CBO forecasts could be underestimating the level of potential GDP in 2040 by as much as 2.4% to 4.3%.”
What’s more, a survey by Morgan Stanley’s research group, AlphaWise, found that iGen will enter the workforce, on average, in better financial shape than millennials, with a stronger job market, a stronger command of tech skills and potentially less student loan debt.
If these rosy projections are accurate, the dire predictions of insolvency for Social Security that we seem to hear constantly may get pushed back decades, if not longer. So maybe it wasn’t such a terrible decision to pull that money out of your IRA to pay off a few bills after all.