Just over a decade after the 2008 recession that financially plagued Millennial job-seekers and students, many members of the generation are still hurting. According to a new Deloitte study reported by The Washington Post, American millennials have an average net worth of less than $8,000, a significantly lower sum than former generations had amassed at the same point in their lives.
According to the study, the net worth of Americans ages 18 to 35 has decreased by 34% since 1996 — meaning an adult in the same age group over 20 years ago would have had, on average, a net worth of over $10,000. This difference shouldn't be a shock to millennials, though. Net worth is calculated by adding a person's assets (car, home, savings) to their debts (student loans, mortgages, credit card payments), and millennials are typically debt-heavy and asset-absent.
Along with younger members of Generation X, millennials have amassed over $1.5 trillion in student loan debt, NPR reports. Due to this and other factors, many people are delaying homeownership (or in some cases, writing off property ownership goals entirely) and are significantly behind on retirement savings, thanks to a combination of high debts and a lack of employer benefits like 401K options, especially for gig workers.
To some people, it might seem that the easiest way to improve net worth is to reduce spending, but for millennials, that goal is frequently impossible. Despite common lore that millennials are tossing all their disposable income at overpriced avocado toast, the generation actually spends a higher percentage of their income — 17%, according to the Boston Globe — on fixed expenses than previous generations did. This is understandable, considering that the cost of living in America has soared under the Trump administration; as the study reports, from August 2017 to August 2018, housing costs (for renters) rose 3.5% and medical care costs increased by 2.3%. The federal minimum wage, however, has not increased since 2009, despite a rate of inflation of about 2% every year since 2016.
In other words, everything today costs more than it did in previous decades, but millennials are set up to make less than their predecessors. Factor in interest rates on existing loans and debts — as well as the fact that, according to the study, income for the top 20% of earners rose 1,300% more than income for the lowest tier of earners between 2007 and 2017 — and the concept of collecting assets to increase net worth while still attending to one's basic needs can naturally feel daunting.
Yet as millennials become more vocal advocates for economic equality and run for office, more policies may soon be put in place to help younger generations succeed. Senator and presidential candidate Elizabeth Warren has extensive plans to cancel the majority of student loan debt, as well as subsidize childcare and other prohibitive but necessary expenditures for Americans. The Senate Budget Committee, meanwhile, has held hearings on the problem of student loan debt, and some states are acting on their own to try and combat the issue. On May 29, for instance, the Connecticut State Senate passed a bill to make college more affordable for its residents, and New York governor Andrew Cuomo has long discussed a free tuition plan for residents.
With these kinds of plans in place, more young people will hopefully be able to start saving up and prepare for the future. As Suze Orman has shared on her Women & Money podcast, saving just $50 per month in your 20s can lead to to hundreds of thousands of dollars by the time you're ready to retire — a worthy goal, but one that right now, is out of reach for far too many millennials.
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