Annie Lowery, a staff writer at The Atlantic, has written an article that throws substantial cold water on the argument that Millennials are participating to the same extent economically as did Boomers and Gen Xers. Her article, titled “The Next Recession Will Destroy Millennials” is about as subtle as a Mack truck playing on the offensive line for your football team.
Regrettably, Millennials are already struggling from the dual burden of debt and non-existent savings. Unlike those that came before, they are likely to be the first generation in modern economic history that doesn’t end up better off than their parents. Why? First, many were entering the workforce at the time of the Great Financial Crisis (GFC) and the impact on their wages was not temporary by any stretch of the imagination. According to the article, Millennial men were making the same wage as Gen Xers when they were the same age and roughly 10% less than Boomers when they were at that age, too, despite a substantially larger and more “prosperous” U.S. economy. Wow! In addition to finding quality jobs with quality wages almost as difficult as finding the Loch Ness Monster, these younger adults were burdened by student loan debt the likes we’ve never seen before.
About 75% of Gen Xers were able to get through college and any post-graduate work with no student loan debt, while 50% of Millennials needed student loans at twice the amount of Gen Xers to achieve the same level of education. Is it not surprising then that Millennials are not buying homes, marrying, and having children until much later in life? I find it particularly shocking that the average age of a homebuyer today is 46! That represents the oldest first-time buyer since data was recorded. Furthermore, they aren’t saving for retirement, but how can they? With the impact of low wages, ever-increasing rents, and significant student loan debt, there is little, if any, disposable income left to fund the basics let alone a retirement plan whose need seems so far into the future.
This is where the use of defined contribution plans instead of defined benefit plans is crippling the financial futures of so many people. Even more sobering than what is happening to Millennials is the fact that Gen Zers may have it even worse. UGH!