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Hello, Henry!

Once upon a time, there were hippies, yippies, yuppies, and other unflattering monikers. Today, one is in vogue from 20 years ago: “High Earner Not Rich Yet,” dubbed for millennials in their early 30s earning between $100,000 and $250,000 and feeling “broke.” In his 2003 story, “Look Who Pays for the Bailout,” Fortune author Shawn Tully coined the ‘Henry’ this way.

“You account for a large portion of America's most ambitious, productive people — you are executives, law firm partners, airline pilots, doctors. You're not poor, of course. Even in places like New York City and San Francisco and Chicago, an income in the low to mid-six figures is hardly poor. But with high taxes and the all-around high cost of living, you certainly don't feel rich either. Most of you are "Henrys": High Earners Not Rich Yet.”

For Some, the Well Could Run Dry

These confident, ambitious and achievement-oriented types say they believe in work-play balance and a flexible work environment. They also say they are not very willing to sacrifice their personal lives in order to advance their careers.

Most Henrys say they prefer to spend money on “experiences,” rather than buying a house or expensive condo. And that truth has played out, as the median age of the U.S. homebuyer is now 47, compared with 31 in 1981. However, tighter mortgage lending standards for younger people and those with lower credit scores didn’t help.

Some millennials will rent a home or apartment to remain mobile, while others will own or rent one or more homes to enjoy living in style. When international travel is in the offing, they stay in luxury hotels. Sure, some Henrys do spend lavishly and live above their means, but not unlike other generations before them.

And so the points being made here are strictly to inform, not to judge or criticize anybody’s lifestyle. The cold, hard truth is Henrys are strapped with astronomical student-loan debt, credit card debt and high living expenses. This, as Shawn Tully wrote, makes them feel “broke” – not in the true sense of the word – because they are not penniless, but psychologically, and in need of financial planning and wealth management, our specialties here at Hefren-Tillotson.

Is There A “Warren” in Your Henry Neighborhood?

You’ve probably heard stories about Warren Buffett, the fourth richest person in the world, about his frugality. "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down," is one of his many famous quotes. Buffett lives in the same house he and his first wife raised their three children in, the house he paid $31,500 for in 1958. The median home price was around $19,150 then. It’s worth more than $700,000 today. 

Warren and his family never flaunted what they had. They cut coupons, ate at local family restaurants and shopped at discount stores. Warren believed in living within his means, knowing full well that a person will go broke when continuing to spend more than they make.

You Are What You Think You Believe

Warren Buffett and his idiosyncrasies don’t exactly mesh with today’s Henrys because they don’t do today what people of that ilk did then. Henrys are still middle class earners these days, according to a Business Insider and Morning Consult survey.

So if by now you have the impression that most Henrys are not savers, you are correct. Generally speaking, they don’t scrimp and save like those before them, nor do they buy cheap. Some might say that is a fault. But many if not most, who are either not saving or aren’t saving enough for retirement while they’re enjoying what they have, say they live in fear of the stock market – and the losses that go with it.

And therein lies the problem and the solution: the fear of loss is sometimes stronger than desire for gain – all the more reason why meeting with a Hefren-Tillotson advisor is the best way to work out:

 1) How to structure a portfolio to mitigate losses

2) How to save and still enjoy their lifestyles

3) How much they can afford if they want a house

4) How they can prepare for meeting the financial needs of having a family

5) How to initiate a successful retirement plan for years to come 

Whether you are a Henry or an ordinary Joe, Hefren -Tillotson can help develop a retirement planning or wealth management strategy that will work for you. Give us a call today.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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Hefren-Tillotson Inc. is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN® for individuals and businesses. The firm’s wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFS’s. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills. MEMBER SIPC.