Who wants to be a Millennial?

Recent surveys have shown that over half of US millennials, those reaching young adulthood in the early 21st century believe that they’re going to achieve millionaire status at some time in their lives. According to a 2018 TD Ameritrade survey 53% think they’ll be millionaires one day with over a quarter believing that they’ll reach that milestone by age 40. Admirable positivism but other stats seem to show a more negative picture. Having grown up in the digital age may have its advantages but coming of age during the financial crisis has meant that millennials born in the 1980s are at the greatest risk of becoming a “lost generation” for wealth accumulation, according to a 2018 report by the Federal Reserve Bank of St. Louis. As of 2016, people born in this decade had wealth levels 34% below where they would most likely have been if the financial crisis hadn’t occurred, the report found. This has all made the financial burden tough with millennials doing worse financially than other generations at their age in part due to parental belt tightening. This may explain why more than half of millennials think they’ll be wealthier than their parents and a third believe they are better off financially than they thought they would be 10 years previously. The ugly truth is however that millennials are actually less wealthy than previous generations were at their age at any point between 1989 and 2007, according to The Economist, citing a paper by the Brookings Institution. Median household wealth is roughly 25% lower for those aged 20 to 35 in 2016 than it was for the same age group in 2007. Despite their positivism many millennials seem to be depending on the bank of mum and dad well into their thirties despite their desire to achieve financial independence which many believe defines their transition to adulthood. Parents most often help foot the bill for everyday expenses as well as those that may be unseen e.g. family phone deals, private health insurance plans etc. A quarter of all young adults move back home, while a third get help with rent or mortgage payments and  40% of those who do ‘own’ property had help with a deposit from their parents.

Interestingly the vast majority of millennial’s don’t feel guilt but rather gratitude and that it’s the way to get ahead in their early years. I suspect many a parent finds it a financial burden but says little or nothing. Empathy is a late developmental trait that parents expect earlier but doesn’t fully develop until the late teens or early twenties. This compounded with a lack of ‘real world’ experience may create family tension especially in families used to standing on their own two feet somewhat earlier in life. Millennials do however show insight with almost two-thirds admitting this parental help could make them too dependent as they get older. The biggest reason for the dependence is the debt burden many millennials carry and for many most of this is debt relates to their years at college/university. When graduates are asked many regret these years with many believing it wasn’t worth the debt, certainly in the short to medium term albeit statistics do show that graduates do often make up financially in the long term.

Employers often complain that prospective employees are not being given the education and skills they need. There are of course some vocational subjects such as medicine and teaching but most are not. I suspect students will demand better value for money courses in future or else students will forgo university and find employers who are willing to train them appropriately.

Many millennials are struggling to just keep their heads above water let alone save towards property or a pension. The state pension is being pushed further and further away and it is unlikely any millennial will get a state pension until they are in their seventies. Jam today is likely thinly spread leaving little or no jam for tomorrow. Some commentators see it as a positive that millennials will have a longer working life and thus more time to save and build up a pension but may be missing the fact that many will live to 100 and thus need a far bigger pot! So rather than giving handouts some parents are starting or adding to their children’s pension plans which if started early and with the power of compound interest and reinvestment (without grubby little hands raiding the piggy bank) may actually be of far more value in the long term and allows the millennial to stand a little firmer on their own two feet!?

Q Can millennials stand on their own feet and can parents afford to support them – if so for how long?

Q What is the best form of support parents can give? Tough love or ready cash?

Q If you are living longer and having the TOYL, can we rely on our millennials to not only save the planet but pay our pensions? (Whilst we’re presumably spending our kids inheritance!) 

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