Kind of a Drag

Despite being more educated than any other generation, Millennials are having a tough time. They are highly educated but burdened by student debt. They graduated from college into the difficult job market following the Great Recession. Because of their financial hardships, they delayed marriage and homeownership. Consequently, Millennials have been behind older generations in their accumulation of wealth.  

The Center for Retirement Research (CRR) examines the economic status of Millennials using data from the  Federal Reserve Board's 2019 Survey of Consumer Finances. The CRR researchers, Anqi Chen and Alicia H. Munnell, compare the economic status of Millennials aged 28 to 38 in 2019 with Boomers and Gen Xers when they were that age. They find that older Millennials (born 1981-91) have caught up to late Boomers (1954-64) and Gen Xers (1969-79) in their income, marriage rate, homeownership, and labor force participation. But because of student loan debt, Millennial wealth still lags that of Boomers and Gen Xers. 

Among Millennial householders aged 34 to 38, for example, net worth is just 70 percent of their income. This is less than the 82 percent ratio for Boomers and far below the 110 percent ratio for Gen Xers at the same age. When the researchers took a look at what was holding Millennials back, the culprit turns out to be student loans. Among Millennials aged 28 to 38, fully 40 percent have student loan debt versus just 28 percent of Gen Xers and 17 percent of Boomers at that age. 

"Excluding student loans, the median net wealth-to-income ratio for the leading edge of the Millennial generation looks very similar to that for previous cohorts," Chen and Munnell report. Student debt, they conclude, is a constant drag on the Millennial balance sheet.

Source: Center for Retirement Research at Boston College, Millennials' Readiness for Retirement—A 2019 Update