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.
Another 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.
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.
As 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%.
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.
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.