Many would argue that millennials have it worse than anyone. Struggling with student debt, unable to really get into the workforce, and generally too poor to afford to buy a house makes it seem like there is little hope for millennials saving money. However, if economic history means anything, perhaps they shouldn’t be so worried about their future after all.
Stanford University economist Orazio Attanasio may have proven the stereotype against millennials wrong 20 years ago. In 1994, he conducted a study to measure how different age groups saved money. Some of his findings seem to show that millennials do not in fact have it harder than the rest.
Can Millennials Save Money?
Attanasio’s research found that most people, regardless of what generation they fall under, have a difficult time making it month to month in the early parts of their lives.
Through his research we can see that the older people get, the more money they start to make. With age comes more financial responsibility, such as children and mortgages, meaning it may still be difficult to save money for retirement. Most people remain unable to make any significant savings contributions until they are well into middle age, which is generally when they have more income and less pressure.
According to the Federal Reserve’s Survey of Consumer Finances, 44 percent of people aged 23 to 34 have some sort of retirement savings compared to 31 percent of people the same age in 1989. It appears that young people today actually have more saved for retirement than the generation before them.
However, there are some downfalls yet to consider. Student loan debt alone means that most millennials have a lower net worth than their 1989 counterparts. Fortunately, this net worth amount does not include what will be a young person’s most valuable asset; future income.
Even if you balance heavy student debt with a millennial’s future earnings, their average net worth later in life will likely be more than what young adults in the early 90s had. Perhaps the only good thing about the $1.2 trillion students owe today is that many more people have college degrees now than they did 20 years ago. With a college degree, millennials generally see their future earnings increase overtime.
Still, even if it turns out millennials are slightly more prepared for retirement than those who came before, it doesn’t appear to be a particularly bright future. The Boomers are looking at an average retirement account of $111,000, which comes out to about $6,000 a year in income.
Millennials have some hope, but we still strongly suggest you start saving as much as you can, as early as you can. Compounding interest really is a saver’s best friend.
If you are struggling under the weight of overwhelming debt, call or fill out an online form today for a free consultation, and find out how Washington D.C. bankruptcy lawyer Kevin D. Judd can help you.