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Millennials and Gen Z: ‘Til Debt Do Us Part

Researching generations gives an interesting lens into how perceptions of financial security have changed over time.

Young woman with hands on head frustrated looking at credit cards

The Millennial generation, which now represents the largest generation in the active workforce, and their successors Gen Z, present an interesting lens into how perceptions of financial security have changed over time. Early generations felt financial security was grounded in a long-term job with a large employer, benefits, possibly even a pension plan, and definitely Social Security (for those in the U.S.).

For Millennials, financial security looks a lot different. This generation crashed into the Great Recession, wage stagnation, student loan debt, and rising cost of living. At the same time, the likelihood of Social Security seems to decline by the day, and pensions were often long gone before Millennials entered the workforce.

Even more interesting, perhaps, is that many of these differing generational experiences around financial security have occurred on opposite ends of the generational spectrum—yet may be represented in the very same family. Baby Boomers might be receiving retirement benefits and Social Security and had a chance to buy homes when they were more affordable relative to wages. However, their Millennial children may find those same pathways out of reach.

According to a recent report by Merrill Lynch Wealth Management, one thing these different generations do agree on is that financial success has nothing to do with being rich.

“How do today’s early adults define financial success?” the report asked more than 2,700 Americans ages 18-34. “Sixty percent say that it’s being debt free; only 19% say that it’s being rich. Freedom from debt seems a low bar of accomplishment, yet it’s an elusive goal for many early adults.”

Financial freedom can be a high hurdle

Why is that? Millennial expert Jason Dorsey, co-founder of The Center for Generational Kinetics (CGK), shared his research and insights on the unique and often polarized fiscal views of Millennials and Gen Z with Business Insider. also spoke with Dorsey to get more perspective into Merrill Lynch’s findings.

As we shared early in this post, Millennials graduated from college—if they graduated from college—and entered the workforce during the height of the Great Recession, in the aftermath of the dotcom bust, and with considerable student-loan debt in tow. Dorsey explained to Business Insider, “They delayed many of the traditional markers of adulthood, such as marriage, kids, and buying homes because of this.”

And not just that. Millennials, struggling to pay off those student-loan debts (which reports are at a national record level of $1.5 trillion) has made it hard for many of them to save money, whether for an emergency fund, down payment, or for retirement.

The struggle to save only seems to grow

“Student debt is having major ripple effects on early adults’ futures, financially and personally,” the Merrill Lynch report said. “Four-hundred-thousand early adults who would have purchased a home a decade ago have not been able to afford one…and indebted graduates are contributing only about half the amount to their 401(k)s compared to those without debt.”

Dorsey concurs. CGK’s substantive research on the generation indicates older Millennials realize they’re going to have to play catch-up with their finances if they ever want to be able to retire. In fact, he says, “Some of them have already decided that they likely will not ever be able to afford to retire.” This is a huge deal, because if Millennials don’t think they will be able to afford to retire, they may choose not to save and invest for retirement.

The weight of debt is real for the older members of the Millennial generation, which explains their aversion to debt. Gen Z’s aversion stems from watching their older peers—the Millennials—struggle through the roughest part of the Great Recession.

But it’s not all doom and gloom, Dorsey says.

Making a Millennial change

“As Millennials continue to get older, with the majority of them now over the age of 30, studying and understanding their relationship with money, investing, and retirement planning has never been more important,” Dorsey explains. “This generation is poised to upend—and is already driving tremendous change—across banking, financial services, home buying, and many more categories.”

This is why the team at CGK regularly leads deep-dive U.S. and global studies into the mindset of Millennials, Gen Z, and money, including how they earn, spend, save, invest, and influence financial institution trends and conversations.

“The fact is, the Millennial and Gen Z generations are resilient, and they’re motivated to turn what has been a challenging intro to adulthood into a successful, financially stable future,” Dorsey says. “The insights we’ve uncovered in our research at CKG tells me, without a doubt, that these generations are going to make that happen.”

As Millennials continue to drive personal finance, investing, and fintech trends, the team at CGK will be watching them closely to continue to inform generational understanding and uncover emerging trends.

Want more insight into Millennial and Gen Z investing and saving?

The CGK team delivers customized presentations to financial services, banking, and fintech clients around the world. We are experts in separating generational myth from truth and helping leaders, financial advisors, investors, bankers, and executives best serve these new generations at a critical time in their emergence.

Contact us today for a proposal or to learn about our different keynote speaking options and availability.

For our latest discoveries, follow CGK on Twitter @GenHQ. We are passionate about sharing our latest generational insights!

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