Millennials are the biggest — but poorest — generation

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Millennials became the biggest U.S. generation this year, numbering some 73 million people. In terms of wealth, by contrast, they’re still living in the shadow of previous generations.

Despite making up nearly a quarter of the population, millennials — defined as those born between 1981 and 1996 — own a scant 3% of the country’s wealth, according to the Federal Reserve’s Survey of Consumer Finances. In comparison, when baby boomers were the age millennials are today (around 1989), they controlled 21% of all national wealth. Generation-X’ers at the same age (in 2004) held 6%.

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And it’s not simply that millennials aren’t amassing much wealth — they’re also sinking deeper into debt, carrying a disproportionately high 16% of the nation’s liabilities, the Fed data show.

Millennials have the dubious distinction of being the first generation to fall behind their parents’ standards of living, as they wrestle with high student debt (twice the per-person debt, on average, that Generation X had) and historically high housing costs, whether they rent or own their homes. Millennials are also earning far less than earlier generations, having reached working age during and after the financial crisis and the Great Recession.

That predicament partly explains why many young Americans have been slow to reach certain traditional markers of adulthood, such as starting a family, buying a home and otherwise achieving financial independence. This delay is often driven by financial realities — soaring higher education costs, high levels of debt and lower incomes.

Meanwhile, achieving independence later in life can also compound those financial difficulties.

“If it takes you longer to get a job where you can establish yourself, and you have people putting off getting married, that pushes off major decisions about getting settled and having the kind of job where you can start accumulating income,” said William Frey, a demographer and senior fellow at the Brookings Institution.

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Frey noted another reason for the generation wealth gap: Younger Americans are much more diverse than earlier generations, with 44% of millennials being people of color. So splitting up Americans into generational groups captures many more people who were historically excluded from wealth-creation.

“Latino, black and immigrant parents of millennials are less likely to be in a position to provide millennials with money for home down payments, college tuition and other supports that were provided to middle class whites in earlier generations,” he said. “These are related to their current and future wealth and income levels.”

Indeed, one reason many of the nation’s 72 million boomers are in such a strong financial position is their high rate of homeownership compared with later generations. By the time the oldest boomers turned 34, in 1980, more than half were homeowners, according to Frey’s research. Today, 39% of people aged 25 to 34 own their home.

Many young people who do achieve a measure of financial independence have some help, data show. One-fifth of all home purchases are made possible through family money, while one in six Americans receives financial help from their parents on items ranging from the phone bill to rent. Collectively, parents of adult children are spending twice as much on their kids as they are saving for own retirement, CBS News has reported.

It’s not surprising, then, that many younger people lack the faith in the economy that prior generations had. More than two-thirds of millennials believe it’s uncommon for a person who starts out poor to become rich through hard work, according to GenForward, a survey from the University of Chicago. Last year, a tweet advising workers to have double their salary saved by age 35 went viral, drawing reactions from laughter to outrage.

“I’m 35 and I’ve got a whole $5k in my retirement, and here I thought I was doing well!!” said one tweeter.

Another replied, “It’s not that bad, you just have to find a way to live until you’re 150.”

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