Wealth

A Life-Cycle and Generational Perspective on the Wealth and Income of Millennials

Young adulthood is the life stage when the greatest increases in income and wealth typically occur, yet entering into this period during the Great Recession has put Millennials on a different trajectory. As a result, this generation will need to make very large gains in the years ahead to compensate for these shortfalls.

Understanding the dynamics of how the recession has impaired the financial outlook of Millennials, such as identifying how far behind they are compared to previous generations of young adults, the impact of the recession on their current wealth holdings and earning potential, and the pace at which they’re recovering, is essential to developing appropriate policy interventions that can put them back on track.

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Millennials and Homeownership

For young people throughout the twentieth century, and down to Millennials today, becoming a first-time homeowner has represented a symbolic milestone along the road to adulthood. From a financial perspective, owning a home can be a rewarding investment, providing a means to take advantage of generous tax breaks and accrued equity. Buying a home also allows families to access neighborhood amenities and a range of intangible benefits that come with residential stability. While homeownership is not always the right choice—financial or otherwise—for families in all circumstances, it has historically been one of the most desired and valuable assets on the balance sheets of American families. Yet the Great Recession may have changed the calculation young families make when thinking about becoming a homeowner.

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Millennials and Retirement

Despite coming of age in a tough economic climate, Millennials perceive their financial prospects to be favorable even in the face of overwhelmingly gloomy evidence about their retirement preparedness.¹ But being financially secure in retirement takes more than optimism. The evidence about Millennials’ actual financial status reveals a generation struggling to save for the long-term, a problem complicated by the unique economic and employment situations it faces and by the policy landscape it has inherited.

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