By Hillary Hoffower, Businessinsider.in June 6, 2019
American millennials have an average net worth of less than $8,000, according to a new Deloitte Study. This puts millennials financially behind other generations at their age.
Increasing living costs and staggering debt, including student loans, make it difficult for millennials to save money. American millennials are financially worse for the wear.
According to the study, the net worth of Americans ages 18 to 35 has decreased by 34% since 1996, making them “dramatically financially worse off” than older generations, Business Insider’s Kate Taylor reported.
These findings underscore previous research indicating that millennials are financially behind.
Millennials are less wealthy than previous generations were at their age at any point between 1989 and 2007, according to The Economist, citing a recent paper by the Brookings Institution. Median household wealth was roughly 25% lower for those ages 20 to 35 in 2016 than it was for the same age group in 2007.
Meanwhile, a report by the Federal Reserve published in November found that millennials have much less money than Gen Xers and baby boomers had at their age: “Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth,” the study said.
Living costs and debt make it hard for millennials to save According to the Deloitte study, compared from 2007 to 2017, millennials are spending 16% more on housing, 26% more on food costs, 21% more on healthcare costs, and 65% more on education.
The latter in particular is a big burden. Student debt has increased by 160% since 2004, the study found. And college tuition has more than doubled since the 1980s, according to Student Loan Hero. Consequently, millennials have taken on at least 300% more student debt than their parents, according to Michael Hobbes of HuffPost.
As of 2019, student-loan debt is at an all-time high with a national total of $1.5 trillion. The average student-loan debt per graduating student in 2018 who took out loans was a whopping $29,800.
But student loans are just one form of debt millennials are juggling. According to a recent Merrill Lynch Wealth Management report, 81% of early-adult households carry a collective debt of nearly $2 trillion, including car loans and mortgages, but mainly student loans and credit card debt. Those who carry the latter have an average balance of $3,700, and more than half said they’re struggling to pay it off.
Various debt and soaring living costs ultimately make it more difficult for American millennials to adequately save. More than half of millennials don’t have a retirement account, and more than half also have less than $5,000 in their savings accounts, according to an INSIDER and Morning Consult survey.
Coupled with the ongoing fallout of the Great Recession, these financial problems are creating an affordability crisis for American Millennials.