The Future Isn’t Looking Bright for Millennials

Earlier this year, the Young Invisibles analyzed Federal Reserve wage data of 25-34 year olds in 1989 vs. 25-34 year olds in 2013. What they found was that millennials are on track for much lower lifetime earnings than their parents. In fact, after adjusting for inflation, they found that young adult workers earn $10,000 less (20% less) than their parents. This is a huge problem because income earned early in your career often sets the stage for lifetime earnings.

Screen Shot 2017-05-01 at 8.54.16 PM.pngAnother problem millennials face is rising debt due to rising college tuition. The bar chart shows those who get a degree and have loan debt earn 25% less than baby boomers in the same situation. These declines were so steep that young people today with a degree and debt earn about the same as young workers with no degree did in 1989.

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Another concern is that millennials have accumulated half the assets (sum of all bank accounts, retirement funds, the value of insurance, annuities, trusts, vehicles, real estate and business equity) as baby boomers.

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Screen Shot 2017-05-01 at 8.50.18 PM.pngAs expected, the net wealth (net worth: difference between total assets and total liabilities) of millennials is also much lower than baby boomers. Net wealth is viewed as the most comprehensive measure of financial security and has decreased by 56%. The net wealth of those who received a degree with debt has dropped a staggering 92%.

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These numbers are significant and probably shocking to most readers. The way millennials can prepare for this is by saving for retirement as early and as often as possible. This is consistent with the Young Invincibles’ report. They found that millennials are 56% more likely to save for retirement than baby boomers. However, there is a concern that the reason for this is due to the changes in our retirement system, such as disappearing pensions.

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This evidence shows a significant decline in financial security between the millennial and baby boomer generations. As a society, we aren’t giving this issue enough attention. This problem could substantially impact our future quality of life and could negatively affect generations to come.

-Will D’Agostino

8 thoughts on “The Future Isn’t Looking Bright for Millennials

  1. jpcoug19

    Great post Will! I think an interesting part is the rise of college tuition prices causing younger people to have higher debt when they graduate school. This is the case when there is the same demand for good jobs in the work force. I think in the long run the high supply of people going to college will decline due to these high debts.

    Johnny Coughlin

  2. jacknedorostek

    Will, great post! As millenniums, this obviously stands as a very pressing issue. It is a bit scary to see, given inflation, how much more baby boomers made. Although we will come out of Holy Cross with large student loans, hopefully the opportunity cost will be worth our while.

  3. rjdowd19

    A majority of millennials seem to have no financial literacy (except HC students, of course) and thus are setting themselves up for failure. Student loans are the main reason why millennials will spend most of their careers paying off this accumulated debt. Hopefully the next generation learns from our mistakes.

  4. lrtamburello

    Great post, although it is a bit depressing. I was unaware that millennials are making less than their parent generation. It would be interesting to explore the reasons behind this. Certainly, financial literacy is key for our generation to prepare financially for the road ahead.

  5. timhaemmerle

    Well done Will! The part that I found most intriguing was when you mentioned how millennials need to save for retirement as early and often as possible. This is concerning because many of us need to pay off the massive college loans as discussed, and then still find a way to start saving for retirement. Additionally, the amount of Social Security benefits left when we start to retire may not be enough to benefit us that much. This is certainly a major issue and needs to be remedied in some way.

  6. katiepiro

    Good post! I agree with others in the comments that nowadays it is essential to get a college degree in order to get a good job. It is upsetting that our generation needs to start thinking about retirement at such a young age. Hopefully, as others stated, future generations will learn from the mistakes made by the generations before us and this will not be a problem in the future.

  7. nbharp18

    Liked the post Dags! One thing that might be causing this drop in incomes is the amount of students graduating with degrees in lower-paying fields, since a student with a degree in Journalism going to work at a magazine isn’t going to earn as much as a student with a degree in Finance working at Goldman Sachs. That said, however, it is definitely scary as a student who will be graduating in a year to see this trend. What is heartening to me, however, is that students are starting to save much more that their parents, which I think bodes well for future economic growth.


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