Often typified as a generation grappling with unique financial difficulties, millennials have faced the brunt of student loan debt, escalating living expenses, and the residual impacts of the Great Recession. However, as they transition into middle age, recent figures indicate that the typical American millennial is now more financially stable than half a decade ago, despite the adversity they’ve faced.
Born between 1981 and 1996, the eldest millennials have now crossed the 40-year threshold. Many have reached significant life benchmarks over the last decade, such as becoming homeowners and parents. Nevertheless, these accomplishments have not been achieved without considerable financial challenges.
Exorbitant housing and childcare expenses, a substantial weight of student loans, and the lingering effects of the Great Recession have disproportionately impacted older millennials. Yet, available data implies that the typical millennial is financially better off now than they were in the past. Career advancement, coupled with a general tendency for income to grow over time, contributes to this progress. But even in comparison with previous generations, millennials appear to be holding their ground financially.
Contrary to common stereotypes, the average American millennial currently earns between $52,000 and $62,000 annually. This is a noteworthy rise from the period just after the Great Recession when millennial household income plunged over 10%. Nevertheless, by 2019, median household income for millennials had escalated to $70,283, reaching $74,862 by 2021. When adjusted for inflation, these figures suggest a significant surge compared to older generations.
Net worth paints a similar picture. The average net worth of a U.S. millennial more than doubled from the first quarter of 2020 to $127,793 by the start of 2022. Although wealth accumulation has been gradual, recent data suggests that millennials are now almost on par with older generations at the same age in terms of wealth.
Student loan debt remains an area of unique challenge for millennials. Nearly half of all millennials are saddled with student loan debt, with the average balance standing at $40,614. This debt burden has posed a substantial hindrance to financial independence and homeownership for many millennials.
However, in spite of these obstacles, a majority of millennials have managed to purchase homes. As of the close of 2022, approximately 51.5% of millennials were homeowners, signifying a significant achievement for this generation. Although they entered the housing market later than their predecessors, millennials have been on a home buying spree lately, with seven million of the 10.8 million new millennial homeowners acquiring their homes within the last five years.
As millennials progress into middle age, many are also starting families. However, their pace of family expansion is slower compared to previous generations. By 2018, only 55% of millennial women between the ages of 22 and 37 had given birth, in comparison to 62% of Gen X and 64% of Boomers at a similar age. The high cost of childcare, averaging between $9,000 and $9,600 annually, poses a significant hurdle for many millennial parents.
To sum up, while millennials grapple with unique obstacles such as student loan debt and high cost of living, they are better off financially than they were half a decade ago. This progress is encouraging, and it will be intriguing to monitor how their financial trajectory continues to shape up as this generation continues to age.
