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The Millennial Generation Part II

The Millennial Generation Part II

September 06, 2017

In a previous blog, we explained the size and impact of the Millennial generation, the children and/or grandchildren of most of our clients. Many people have been impacted by the Baby Boomer generation over the last 50 years, since they made their presence known shortly after World War II in the early 1950s. The Baby Boomer generation is approximately 77M people. However, the Millennials, which were born from 1980 to 2000, greatly outnumber the Boomers totaling nearly 92M people in total.

 There are many differences and challenges that Millennials face that impact their thoughts and views on life, careers, and finances. First, the Millennial generation is more encumbered by student loan debt than any previous generation that we have seen. The average student loan debt balance for 25-year olds in the United States, according to the Federal Reserve Bank statistics in 2003, was approximately $10,600. Today the number is nearly double that, as it has risen to nearly $21,000 per student as of 2013, the most recent available statistic.

 Millennials are also much less likely to get married and/or buy a home young. In 1968, 56% of adults between the ages of 18 and 31 were married and living in a house that they owned. In 2012, according to Equifax and the Consumer Credit Panel, only 23% of 18 to 31-year olds are married and living in their own home. There are also far fewer Millennials that own their own automobile. According to a Goldman Sachs survey in 2013, 30% of Millennials have no intention of purchasing a car, and 25% would only buy a car if they really needed it. 

 The combined impact of higher levels of student debt and the difficulties in obtaining the jobs that they want or went to college for after the 2007-2009 financial crisis, have put additional strains on Millennials. It has caused them to delay household formation, getting married and buying their own home. This caused many to not have an interest in the commitment or burden of owning a car, and it has made many of them very weary of big employers, and many of them therefore change jobs ever two to five years. This means that they do not build up significant pensions or retirement plan assets that their parents and grandparents did.

 We will conclude this series in a few weeks with what this means, as the Millennials seek to create financial security for themselves in a much different way than their parents and grandparents did. Understanding these issues from the point of view of the Millennial generation is very important, as it helps us understand the challenges that our children and grandchildren go through as they try to "Move Forward" in life.