The economically lost generation of Millennials: taking a look at net worth data, living arrangements, and student debt.

Young Americans probably missed the memo regarding the economic recovery that has been taking place since 2009.  Apparently massive student debt, living at home, and a market full of low-wage jobs isn’t exactly the picture perfect ideal of a booming economy.  Millennials are facing an uphill battle.  The market has virtually eliminated the pension system and has reduced benefits to the barebones for most workers.  All of a sudden a large army of Americans are part of the “Uber” economy of freelance workers.  You have two systems clashing with one another when many baby boomers are trying to unload their assets to another generation that is simply not as wealthy or economically secure.  The recovery has been anything but even and the brunt of the financial damage has been taken on by the young.  If we look at the figures it paints a picture of a lost generation financially for young adults.

Net worth

When you think of wealth net worth should be the first thing that comes to your mind.  This is your assets minus your liabilities.  However, many young Americans with massive student debt start out life in the negative equity column.  The road to wealth building takes years and starting with tens of thousands of dollars in student debt is unlikely to be healthy.

Take a look at changes in net worth broken out by age brackets.  The young are losing major ground here:

Those 40 and younger have seen no real net worth increase for a generation.  This is a financial lost generation for the future buyers of Americas.

Savings and Student Debt

There is now clear evidence that having a high level of student debt is a hindrance to building up your net worth.  Take a look at this chart:

Having student debt simply makes it harder to build your net worth.  And with virtually all recent college students taking on some student debt, we are setting up an entire generation on a path that will make it harder to plan for retirement.  These issues will hit hard in older age.  We already see that half of Americans on Social Security today would be in financial poverty if it were not for the Social Security payment.  But what then when the Millennials enter retirement with even less savings and a lower payout rate?  Many can’t even afford to live on their own.

Housing

The first time home buyer market is in shambles because young Americans are having a harder time finding the income to pay for a mortgage.  Ultimately you need to feel confident with your job before buying a home, the biggest purchase of your life.  Many Millennials are simply living at home:

The homeownership rate for those 18 to 34 is the lowest it has been in a generation.  It isn’t because younger Americans don’t want to buy but simply because incomes don’t allow them to make the big purchase.  Plus, you have home values being inflated once again by the Fed and artificially low rates.  This environment has lured many large investors to dive into single family homes and crowd out regular buyers.  Wages are stagnant yet home prices went up strongly in the last two years thanks to bank speculation.

Millennials are seeing very little benefits from this recovery.  Tuition continues to go up, home prices continue to move higher, and many have jobs in the growing low-wage economy.  Many talk about the lost generation in Japan but we are living through a financial lost generation for Millennails.

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