In April of this year, Millennials officially surpassed Baby Boomers as the largest living adult generation according to the U.S. Census Bureau. This year also marked the third consecutive year that they accounted for the largest portion of the workforce.
Unfortunately, neither development has yielded many positive outcomes for the cohort.
In fact, despite their volume in the labor market Millennials only secured 4.6% of the wealth in the US through the first half of 2020, compared to Baby Boomers who control 53% of the wealth ($59.6 trillion) in the US.
Generation X accounts for just over 25% ($28.5) and the silent generation rounds out the list with a little more than 17% of the county’s wealth on balance.
“As a whole, boomers have fared better financially than Gen Xers (born between 1965 and 1980) and millennials (born between 1981 and 1996) throughout every stage of their lives. Boomers currently boast more than half (57%) of the nation’s wealth, while Gen X owns just 16%, and millennials 3%,” MarketWatch reports.
The data suggest that adults under the age of 40 have been racking in less and less every year since 1990.
Back in 1989, this demographic claimed just under 13% of the country’s wealth.
“Indeed, at a median age of 35, Gen Xers owned just 9% of the nation’s wealth in 2008 — less than half what boomers had at that age. And millennials will have to triple their net worth in the next four years to catch up to Generation X at 35, and increase their wealth sevenfold to catch up to boomers at that age,” personal Finance reporter, Nicole Lyn Pesce wrote of the disparity.
“That will be a difficult feat indeed considering most are saddled with student loan debt which has hit a record collective $1.6 trillion. The Federal Reserve estimates that more than a third of the 45 million Americans burdened by that debt are under 30.”
That’s the heart of it. Student loans have put Millennials several leagues behind Boomers, Gen Xers, and even Gen Zers in many ways. In an effort to avoid defaulting on them, borrowers routinely put off other important bills, credit building opportunities, and settle for gigs under their qualifications and education level.
The end result negates their presence in commercial markets because most of their contribution to them goes straight to collectors.
Financial illiteracy plays a big part
According to recent research from the University of Southern Indiana, only 40% of Millenials know what interest means and even fewer can define APR, i.e the annual rate of interest charged to borrowers and paid to investors.
“Four in 10 Americans under age 30 described their financial situation as “poor” in a recent Associated Press-NORC Center for Public Affairs Research poll. And half doubt their ability to pay for an unexpected bill, which is twice the proportion of people ages 60 and older,” Pesce concludes. “Boomers are expecting to pass on their estates to their heirs in what’s being dubbed “the great wealth transfer,” which could see those millennials lucky enough to have relatives with money-collecting $59 trillion in wealth and assets.”