It’s no secret that Millennials continue to face a tougher financial reality, but just how far behind are they compared to previous generations when they were the same age?
A new study from the Federal Reserve Bank of St. Louis found that households headed by someone born before 1960 are better off, while younger households headed by someone born after 1960 are generally worse off.
And Millennials born in the 1980s got the worst deal of all. As of 2016, their median net worth was 34% lower than other generations at the same age. To compare, GenXers were just 18% behind.
What’s causing the disparity?
Contrary to popular belief, the report found the problem is not how much Millennials are earning. Instead, because Millennials are struggling with student debt, car loans, and credit card balances, less than half own homes, and relatively few hold assets like stocks, it’s possible they will never build wealth fast enough to match previous generations.
This shortfall in earning has caused Millennials to delay getting married, put off having children, and generally pump the breaks on spending on large-ticket items like cars and saving for retirement.
What does the future hold for Millennials?
All might not be lost for Millennials, though. According to a recent CNN Money article referencing the same Fed Reserve study, those born in the 1980s have two major things going for them:
- They have a lot of time to get back on track.
- They are the most educated generation, with the highest earning potential.
It will be interesting to see if Millennials ever climb out of this financial rut and how their Gen Z successors will fare in this economy.
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