Don’t blame millennials for their financial woes
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Don’t blame millennials for their financial woes
Despite attaining higher education levels than previous generations, millennials are earning significantly less money, according to the New York Times — and the future looks bleak.
In 2000, 19.5 percent of 18- to 34-year-olds earned a bachelor’s degree, according to census data. That number grew nearly three percent between 2009 and 2013. But while this cohort has progressively become more educated, median income has decreased. It was $33,883 in 2009-2013 — a $3472 decrease from 2000, according to The Times.
Steven Rattner, the article’s author and a financier, ticks off several factors threatening the current and future economic well-being of millennials, including a “slow economy, high unemployment, stagnant wages and student loans,” along with “rising federal debt payments and increased spending on Social Security and Medicare.”
Who’s to blame for this? Largely baby boomers, Rattner says. (He’s a baby boomer himself.)
“We were the children of the Greatest Generation, but we may also be the most irresponsible generation,” he adds.
The Great Recession was a major force behind the higher-education levels/lower-incomes paradox, Rattner says. By extension, he contends, millennials who didn’t attend college have been hit particularly hard. Now, money-managing tactics have changed, he writes.
“Millennials…participate less frequently in 401(k) plans and, scarred by the recession, invest less and keep more than half their money in cash — not a great long-term strategy,” according to Rattner.
Rattner also writes that student debt has been a major blow to millennial finances. Average college tuition has risen by 234 percent since 1993 and, after adjusting for inflation, he says, average college debt has nearly doubled over the past two decades. He says as a likely result of their financial situation, fewer millennials have purchased cars and homes, and more are delaying getting married and having children.
Increasing federal debt levels could also compromise their lifestyles in the future, Rattner says. Projected debt will increase “from less than 80 percent of gross domestic product today to an estimated 181 percent of GDP by 2090.”
Millennials may miss out on Social Security and Medicare benefits as a result, Rattner says.
According to the article, “…only 45 percent expect to receive Social Security benefits during retirement (compared with 68 percent of baby boomers).”
Rattner proposes a series of solutions to reverse the country’s economic plight, which include increased spending on areas such as education and research and development, making student debt more manageable, and decreasing Social Security benefits for the country’s highest earners.
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