Millennials Are Starting to Make More Money
Median income for younger-than-35s in 2016 was the best since the financial crisis, though worse than that age cohort in 2007, 2004, 2001 and 1992
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Income for the youngest Americans has risen steadily since the Great Recession roiled the job market. The unemployment rate among 25- to 34-year-olds surpassed 10% in May 2010. By 2016 that was cut in half to about 5%. It’s now less than 4%.
And Also Saving More Than Their Elders
Nearly three out of every five younger-than-35s in 2016 reported saving money, the highest since 2007 and the third-most since 1992
Percentage That Saved (No Data for 1989)
Millennials aren’t just spending it all on avocado toast. Maybe it’s the lasting scars from the past recession, but more young people are socking away money compared with all other age groups.
But Their Net Worth Is Still Lagging
The median net worth for millennials is lower than it was for young adults in every pre-crisis period dating back to 1989
Millennials, however, are off to a slow start in building up their wealth, with a median net worth of $11,000 in 2016. Younger cohorts in 1989 achieved higher wealth at $14,600, and young people in 1995 had the highest net worth at $18,800.
Millennials Are Wary of the Stock Market
Just 10% of younger-than-35 families in 2016 held stocks, the second-lowest of the survey periods dating back 30 years
Millennials are somewhat wary of the stock market. In the post-crisis years, younger-than-35 families haven’t invested in stocks like their predecessors. Just 10% held equities in 2016, better than the all-time low of 7.2% in 2013, but still a smaller share than even 2010, as the recession ended. The mean value of their stock holdings was $42,400 in 2016. This figure tends to fluctuate widely, reaching $87,700 in 2001 and then dropping to $17,400 in 2004.
The Fed’s classification of “direct or indirect stock holdings” brings millennials closer to the historical average of young adults
Percentage Directly or Indirectly Owning Stocks
Direct or Indirect Stocks as a Share of Financial Assets
Median Value of Direct or Indirect Stocks
It’s not as if millennials are shunning stocks entirely. The next set of data might help explain the difference.
But They Love Their 401(k)s
More than 42% of millennials have retirement accounts, the highest share for younger-than-35s since 2001. And they’re the most funded since 1998
Percentage Owning Retirement Accounts
Mean Value of Retirement Accounts
Though millennials are getting a head start on retirement, not surprisingly, they haven’t come close to accumulating the amount of assets as their older cohorts. Additionally,
a 2019 study from Fidelity Investments found that millennial participation in defined-contribution retirement plans increased by 82% in the past 10 years. It also found that 69% of millennials are entirely invested in a target date fund, likely because they defaulted into the option through their employers. For younger cohorts, those funds are disproportionately invested in stocks.
Millennials Can’t Count On Fixed-Income Like Their Parents
Just 6% of younger-than-35 families in 2016 have savings bonds, compared with a staggering 26% in 1989 and 14% in 2007
Percentage Owning Savings Bonds
Near-zero interest rates have made savings bonds and certificates of deposit relics of the past. Americans younger than 35 have never owned fewer savings bonds or CDs, on a percentage basis. By comparison, a larger share of older generations invest in these ultra-safe investments.
Millennials Lag in Creating Home and Business Equity
Just one-third of millennials owned their homes, the lowest percentage for younger-than-35 families on record
Percentage Owning Their Primary Residence
Mean Value of Primary Residence
Homeownership divides the haves and the have-nots among millennials. Yet for those who do have a home as an asset, the average value of $195,400 is higher than any period except 2004 and 2007, in the lead-up to the housing crisis. That disparity suggests a higher barrier to entry to homeownership.
The percentage of Americans younger than 35 in 2016 who had business equity was the lowest on record, at less than 6%
Percentage Owning Business Equity
Mean Value of Business Equity
Business ownership is down across the board. Even among those who owned businesses, the average value was $123,100, within spitting distance of 1995’s $119,200, the all-time low.
Millennials Are Deep in Debt, But in a Different Way
Millennials face the second-highest leverage ratio ever for young American adults, at 47%
The metric, which compares debt with assets, was topped only by the 2010 period, when the younger-than-35 group was staring down a ratio of 52%. In 2001, it was 34%, a record low.
About 45% of millennials had educational loans at an average of $33,000
Percentage With Education Debt
Mean Value of Education Debt
Yes, student loans are holding millennials back. You’ve heard about the student-loan crisis from Democratic presidential candidates Bernie Sanders and Elizabeth Warren. It’s very real for younger Americans who have the highest figures on record (percentage-wise and amount outstanding) for the younger-than-35 group going back to 1989.
Fewer than a third of millennials have mortgages, the smallest share ever for the less-than-35 group
Percentage With Mortgage Debt
Mean Value of Mortgage Debt
Most millennials don’t own homes and, therefore, most don’t have mortgage debt. Student loans probably also crowded out their ability to take on housing debt. Among those who did have mortgage debt in 2016, it totaled an average of $142,200, the lowest since 2001.
Experian credit data from the first quarter of 2019 tells a story of haves and have-nots. Just 22% of millennials have mortgage debt, still a low figure. But among those who have it, the average amount owed was $222,211 — up 5% from the first quarter of 2018. That was a much bigger jump than any older cohort.
39% of millennials had vehicle loans in 2016, the most for young adults since 2007
Percentage With Car Loans
Millennials will go further into debt to get a car than young people used to in previous decades. They appear to be borrowing to afford today’s high-tech automobiles. The average auto loan debt of $16,300 in 2016 for younger-than-35 families is the highest on record.
At 45%, the share of younger-than-35 families in 2016 with credit-card debt is the highest of the post-crisis period
Percentage With Credit Card Debt
Mean Value of Credit Card Debt
The percentage of Americans younger than 35 who carried credit card balances tumbled in the wake of the recession, but has picked up ever since. But the post-crisis hangover isn’t entirely over with the percentage indebted still higher during the 1990s and early 2000s. The average amount of credit card debt is low both relative to other age groups and previous young generations. However, a report this year from the New York Fed suggests these ramped up purchases might be
catching up to younger people. About 8% of outstanding credit card debt among Americans between the ages of 18 and 29 was delinquent by at least 90 days, the highest level since early 2011.
The share of debt payments to family income is the lowest ever for the younger-than-35 group in 2016 at 14%
Are younger Americans learning to live with debt? Maybe. What’s behind this record-low debt ratio? It’s likely some combination of everything we’ve learned so far.
