In almost every way measurable, millennials in the U.S. at 40 are doing worse financially than the generations that came before them.
Fewer millennials now, just own homes than their parents did at their age. They have more debt — especially student debt. They simply aren’t as wealthy.
Now, if predictions of a long, post-Covid economic boom are to be believed, this may be the last opportunity an entire generation has to build wealth before heading off into retirement.
But since entering adulthood, they’ve been hit with major recessions at critical stages in their financial development: They were 27 years old when Lehman Bros. went bankrupt, and the Great Recession dug in when they should have been establishing themselves in the workforce. “The Great Recession knocked everyone for a loop,” said William Gale, senior fellow in the Economic Studies Program at the Brookings Institution. “It caused unemployment. It caused slow wage growth. It made it harder to accumulate wealth.”
A real-estate attorney, Kellie Beach, a who turned 40 starting aggressively paying down her credit-card debt. She has cycled between periods of carrying balances and paying it all off. “I stayed afloat with credit cards,” she said. “I was just used to swiping and overspending.”
The pandemic jolted her into taking a hard look at her habits.
“Now I have this feeling — like this fire — of urgency,” Beach said. “I’m not going to be in this place again. I can’t wait to get out of this debt. I can’t wait to save up for my emergency fund and reinvest.”
Then, as millennials hit the point in their careers where people traditionally move into higher-paying managerial roles, the pandemic hit. In 2020, the U.S. economy contracted 3.5%; When the oldest Baby Boomers turned 40 in 1986, the U.S. economy expanded at a 3.5% rate.
Now the U.S. economy is humming again, with sectors like retail sales and manufacturing stronger than they were before the pandemic. Stocks are at record highs, and wealth is swelling — especially for the wealthiest Americans. It remains to be seen whether jobs and wages will catch up.