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Millennials Approach Middle Age in Crisis

A current article in The Wall Street Journal is reporting that:
American millennials are approaching middle age in worse financial shape than every living generation ahead of them, lagging behind baby boomers and Generation X despite a decade of economic growth and falling unemployment.

Hobbled by the financial crisis and recession that struck as they began their working life, Americans born between 1981 and 1996 have failed to match every other generation of young adults born since the Great Depression. They have less wealth, less property, lower marriage rates and fewer children, according to new data that compare generations at similar ages.

Millennials helped drive the number of U.S. births to their lowest levels in 32 years. Social Security last month estimated that the current birthrate is expected to create a Social Security deficit of nearly $2 trillion over the next 75 years. Men and women in their 30s are marrying at rates below every other generation on record.

Their slow start has been well-documented in the first years after the recession. New data show that millennials may never catch up with the generations of Americans that preceded them.

Millennial households had an average net worth of about $92,000 in 2016, nearly 40% less than Gen X households in 2001, adjusted for inflation, and about 20% less than baby boomer households in 1989. Wages didn’t look much better. At the same ages, Gen X men working full time and who were heads of households earned 18% more than their millennial counterparts, and baby boomer men earned 27% more, when adjusting for inflation, age and other socioeconomic variables.

One explanation for their slow progress is bad luck. Economists have found that entering the workforce during a downturn yields lower earnings for life. “The effects have health and lifestyle consequences well into middle-age,” said Prof. von Wachter,an economics professor at the University of California, Los Angeles. He reviewed four decades of earning data in his study, which was conducted with Hannes Schwandt of Northwestern University.

Many millennials couldn’t afford to buy houses or invest in the stock market early enough to profit from the sharp escalation of prices over the past decade. About one third of millennials owned homes in 2016, compared with half of Gen Xers at similar ages in 2001, and just under half of baby boomers in 1989. Even if millennials close the gap as they age, asset prices are so high that their expected return on real estate is lower. Losing out on a decade of gains in the stock and housing markets hurt the financial standing of millennial households.

The St. Louis Fed found the median wealth of a family headed by someone born in the 1980s was a third below the level that they would expect, compared with earlier generations at the same age and adjusted for inflation. The regional Fed bank concluded that people born in the 1980s are at risk of becoming America’s lost generation.

The preceding are selected excerpts from the Wall Street Journal article, and have been significantly edited for brevity. The original article is quite detailed, and of substantial length.


  • Sounds like a most unfortunate form of "sequence of return risk" for the young.
  • I don’t dispute the data presented above but it sure doesn’t jive with what I have seen. I hike with a lot of millennials and my experience is the opposite. I am taken back by how much more into finances and building wealth than were those of my generation (early baby boomer) at that point in their lives.
  • @JoJo26- I'm under the impression that you might be a "millenial". If that's correct, it would be very interesting to hear your perspective on this article.
  • @Old_Joe - I am. IMO, millenials, in general, are not financially adept. I'm speaking anecdotally, but I have quite a few data points to go off of. I believe this for a couple reasons (there are obviously exceptions, but from my experience this is the baseline):

    1) From an investment perspective, they do not think long-term whatsoever. I understand many are saddled with a decent amount of student loans and it is important to pay down that debt, however, many friends and colleagues I know don't even contribute to 401(k)s at a level to receive an employer match... 100% return with essentially no risk... Tell me somewhere else you can get that. Yes, the capital is locked up in a retirement account, but even if you want to take the early withdrawal penalty, that return is better than anything else you can get instantly with no risk. The excuse is always student loans, which brings me to my second point.
    2) They overspend. How can you not have enough money to stash away anything for retirement, BUT you can buy 1) HH drinks 2-3x per week, 2) eat out 2-3x per week and 3) buy $6 Starbucks fancy drinks 5x per week?

    It really boggles my mind when I hear people complain about their debt, but yet somewhere they eat out all the time, live in a nice downtown apartment complex and travel frequently, all on a modest level of income.

    Maybe I'm just too conservative with my spend.

  • I presume the below link has some other related data; as I could not open the original link. May be of added interest.
    I agree about nudging folks along into investing in their monetary future; and that it is almost a dead end pursuit.
    I've pushed investing for many years, those of my boomer group as well as the generations behind me. I've also used the Starbucks coffee approach; being, "Hey, match the $1,600 a year you spend on a daily special cup of coffee to a 401k or Roth IRA."
    From about 50 folks over the years, I can report only about 5 who did invest some money.
    With the exception of baby boomers in Michigan, many of whom made a lot of money from auto industry related work; I see a basic disregard for the thoughts of their monetary future. I use exception for the boomers in Michigan, as a large majority had comfortable pension programs.
    So, Gen "whatever" don't have the attitude, nor choose to obtain the aptitude for investing.
    I'm sure the crunch for today's workers comes more student debt, lower wages for most based upon prior generations relative to inflation and I would guess too; that enough of them know a friend or family member who panicked in the 2008 market melt and lost money. Many reasons we would know as to why so many still do not want to save for the future, including what you've mentioned.
    I've done my very best to provide the value of small dollar value investments today and the compounding value into the future.

    I'll add this link from Bloomberg regarding the topic; I won't have access to the WSJ write. This write provides some detail about how many were surveyed, what countries, etc.
  • @JoJo26- Thanks much for your thoughts on this. It's always interesting to hear the experience of someone who is directly involved.

  • edited May 2019
    Wow - Too much here for me to comprehend. But aging populations in general face the problem of too few young workers / tax payers helping support too many retired people (perhaps over simplified). Seems to me Japan has a similar problem. One solution is to allow more (legal) immigration to add to the productive (tax paying) workforce and at the same time bolster the economy buying the things growing families need. Yet, the tenor at home here seems decidedly anti-immigrant. I think a lot of the fear and resentment stems from fake news and even faker news analysis.

    It’s a sad commentary on humanity, I think, that the real population and economic booms are often the consequence of devastating wars. Japan, Germany, much of Europe had to rebuild from the ground up after WW II. The U.S. shifted from a restrictive largely arms-based manufacturing base (with actual rationing of consumer products) back to a consumer driven base.

    I also think some of the trend to smaller families is an outgrowth of fears about global over-population which have been around for at least 50 years. And, of course, a bigger driver is the shift from agricultural-based economies to industrial / tech-based. While we’ll always need food for domestic consumption and export, a one or two man operation today can do the same work it took a family of six to do 50-100 years ago. Thus, farm families tended to be large.
  • I tend to agree with @JoJo26 that what I was like when I first joined the workforce. Couple years later I changed for the better - being married and having a family. My kids are in college now completely funded by 529 plans and they will graduate without debts.
  • edited May 2019
    From the AAII Journal:

    Millennials More Optimistic About Retirement Than Older Generations

    "Among those who participated in the study, the median age at which workers began saving for retirement was 24 years old for Millennials, 30 years old for Generation X workers and 35 years old for Baby Boomers. Over 70% of each generation is saving for retirement using an employer-sponsored 401(k) plan or an alternative individual retirement account. Despite perceived generational divides, all three generations are afraid that they will outlive their savings while in retirement. For this reason, 54% of workers who responded plan to work past age 65, and some do not see themselves retiring at all."
  • The above post was found in the AAII Journal of May, 2019. The snippets were related to a survey done by Transamerica Center for Retirement Studies. The survey report is here:

    Retirement Survey
  • I work with a great deal of Millenials in a technical environment. While they are strong and savvy in many ways that I don't think my generation was, my sense is that their spending habits and early career trajectory expectations are unreasonable. I suppose I was similar in many ways when I was just out of college -- but I completely agree with JoJo26's comments on the weekly food expenditures. I was tight with lunch/HH/coffee expenditures when I was 20-something, as still am, for example.
  • hank said:

    But aging populations in general face the problem of too few young workers / tax payers helping support too many retired people (perhaps over simplified).

    This comment has more to do with social security, which needs major reform.

  • edited May 2019
    This comment has more to do with social security, which needs major reform.

    I’ll submit that the overall increased drag on an economy from an aging population goes well beyond Social Security. For one, the suggestion above doesn’t take into consideration the costs of public and private pension plans. Secondly, seniors are a group highly dependent on government funded services and yet they pay disproportionally lower taxes due to lower incomes (in many cases) and age-related tax exemptions (in other cases).

    There’s not a lot of good data. Japan seems to be the “poster-child” for how an aging population has contributed to economic stagnation. But, I suspect it’s also somewhat of an exception, and so, not a good example to cite. Here’s a link to a pretty good study which attempts to answer the question of why aged populations exhibit lower productivity (exclusive of the impact of pensions and Social Security).
  • hank said:

    This comment has more to do with social security, which needs major reform.

    I’ll submit that the overall increased drag on an economy from an aging population goes well beyond Social Security. For one, it doesn’t take into consideration the costs of public and private pension plans.

    Pensions are another antiquated and unsustainable model, something I've stated on this board on several occasions. We need to start taking responsibility for ourselves and not rely so much on the other generations.
  • edited May 2019

    I thought we were discussing what is, and not your concept (whether right or wrong) of what ought to be.
  • It is what the problem is.
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