This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Success Is Easy. Just Be Born Lucky.

NEW YORK ( TheStreet) -- What does it take to succeed financially? Try to be born lucky, just as a long period of prosperity begins.

OK, hard work and good judgment pay off, too. But a study by the Federal Reserve Bank of St. Louis finds that America's most secure generation, today's 70- and 80-somethings, can credit luck for a good part of their financial well-being.

"Americans in their 70s and 80s have earned more and are wealthier than the baby boom generation -- for the simple reason they were born at the right moment in history," says a review of the study by the Center for Retirement Research at Boston College.

"For example, for households who are currently at least 70 years old, inflation-adjusted incomes increased 28% between 1989 and 2010, and incomes rose by more than 60% for those in their 60s. But during that time, incomes fell slightly for younger households."

That's no reason for the generations that followed to despair. Key elements of financial success, such as thrift and investing stick-to-itiveness, can help make up for the shortcomings of being born in less-than-ideal times.

But if you had your choice, it would be best to be born at the just the right moment -- assuming that finances and not, say, the availability of cable TV, iPhones and modern medicine were your main concerns.

So, what worked for that lucky generation? The key was to arrive at adulthood just after World War II. A 20% decline in births during the Great Depression left workers in short supply in those post-war years, leading to high demand that boosted pay and provided good job security.

Also, the economy took off in the post-war era. Decades later, post-war programs like Medicare helped stabilize older folks' incomes through the Great Recession, which was terribly damaging to younger generations.

The housing bust of the past decade was more damaging to younger generations who had a high percentage of their wealth tied up in their homes. The lucky generation was not as vulnerable, largely because, having owned their homes longer, they carried less mortgage debt. Since many in the older generation were retired, they have not been hit hard by the high unemployment of recent years, and they could rely on stable income sources like Social Security and pensions.

The older generation also the advantage of a habit of saving, which allowed many to benefit from the big gains in financial assets such as stocks and bonds. Younger generations tend to save less. They either came along too late to benefit from big gains in asset values, or they had too little invested to enjoy big returns.

Some of the keys to success for the older generation are simply not available for many younger folk. There's now an excess of workers, not a shortage. There are fewer union jobs, which tended to pay better. And a much smaller percentage of younger workers have traditional pension plans.

But younger folk can apply some lessons from the older generation's experience: Don't tie too much money up in your home, cut expenses to save more, and stick with investing for the long term to benefit from those unpredictable booms.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs