Millennials: You’re Going to Have it Tougher Than Your Parents

Millennials are finding it difficult to save money due to several obstacles. However, if you can set your financial priorities right, Great-West Lifeco can be your partner to building wealth.

| More on:
Man with no money. Businessman holding empty wallet

Image source: Getty Images

The challenges are harder for millennials than their parents or Gen X and baby boomer generations. Born between 1981 and 1996, this group should be earning more than their forebears, given the many income opportunities. However, the real world is far different. It’s tougher to save money to secure their financial futures.

Several factors are stifling millennials to get ahead. Even baby boomers are competition for career advancement. With the average life expectancy of 82.52 years in Canada, many from the older generation are not leaving the workforce. The baby boomers are delaying retirement because of continued financial responsibilities.

Student debt

The biggest thorn is student debt. A college education is essential these days due to the arms race to obtain a job. Aside from skills, post-graduate education, whether from a college or university, gives you an advantage. Thus, millennials stay in school longer while carrying a financial burden.

Easy access to credit

In the consumer credit market, millennials are borrowing at faster rates than their older counterparts. According to a 2018 TransUnion Canada report, credit growth is highest among Canada’s younger borrowers. It appears that the millennials are replacing the baby boomers that are exiting the credit market.

Millennials are susceptible to creating mountains of debt due to easy access to credit in the digital age. The lack of credit management skills is driving delinquency rates higher.

High property values

Starting a family will have to wait for millennials. Buying a property is a life milestone, except that property prices are steadily rising. Even with the low interest rate environment, millennials can’t afford to purchase property. Disposable income is lower due to outstanding student and consumer debts.

Millennials comprise the largest component of Canada’s labour force. If you have a steady job and zero or low level of debt, try to set aside money for investing. Don’t miss out on the opportunities to build wealth during your most productive years. You can fulfill your dreams and retire happy with your family.

Build wealth

Great-West Life (TSX:GWO) can be your insurance for the future. The stock is a Dividend Aristocrat that pays a 6.65% dividend. If you have $20,000 to invest today, the income you will generate is $1,330. Hold it for 20 years, and your capital will grow to $72,484.84 due to the compounding effect.

The $24.4 billion financial holding company is insurance centred and has been operating since 1891. Power Corporation of Canada indirectly controls 70.89% of the company’s common shares. Great-West has approximately $1.7 trillion assets under administration. The company serves the markets in Canada, Europe, and the United States.

In Q2 2020, the company delivered strong commercial results. Net earnings went up 88.02% to $863 million versus the same period in 2019. In the domestic market, net earnings climbed 26.07% to $353 million. At the current share price of $26.31, Great-West is a steal. Analysts forecast a 29.23% appreciation in the next 12 months.

Dream big

Millennials have every reason to worry about the future. However, if this unique generation can set priorities right, they can dream big. The odds are surmountable. It would be best if you were resourceful to overcome them.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

More on Dividend Stocks

growing plant shoots on stacked coins
Dividend Stocks

4 Ways to Grow $100,000 Into $1 Million in Retirement Savings

Anyone can build a million-dollar retirement portfolio. Here are four ways you could practically grow $100,000 to $1 million.

Read more »

A shopper makes purchases from an online store.
Dividend Stocks

3 Reasons to Buy TFI Stock Like There’s No Tomorrow

TFI stock (TSX:TFII) had a hard 2023, but now it's set up for a solid 2024, with an acquisition that…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

5 Secrets of TFSA Millionaires

These lesser-known secrets can help you set up the perfect long-term portfolio and achieve a million-dollar TFSA!

Read more »

analyze data
Dividend Stocks

How to Build a Powerful Passive-Income Portfolio With Just $20,000

These fundamentally strong TSX stocks have paid and increased their dividend in all market conditions. Add these stocks to build…

Read more »

Canadian stocks are rising
Dividend Stocks

iShares S&P/TSX Capped REIT Index ETF (TSX:XRE): Why I Like this ETF Better Than a Rental Property

XRE is a great ETF for gaining exposure to the Canadian real estate sector.

Read more »

Payday ringed on a calendar
Dividend Stocks

3 High-Yield Dividend Stocks That Pay Cash Every Month

These three dividend stocks all offer high yields and have sustainable dividends, making them some of the best investments to…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

3 Stocks That Could Create Lasting Generational Wealth

If you want to start transferring over your wealth, you'll need to actually have some! And these are three stocks…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

Down by 25%: Is Canadian Tire Stock a Buy in February 2024?

Take a closer look at this Canadian retail stock if you are looking for low-cost additions to your self-directed portfolio…

Read more »