Baby Boomers: Are Your Millennial Children Worse Off Than You?
Parents typically want better lives for their children.
So, some baby boomers may be a bit dismayed by the latest study last week from the Federal Reserve data reporting that millennials actually make less money than we did at the same age.
The research shows that our millennial children earn 20 percent less than we did at the same stage of life with a median household income of $40, 581, despite being better educated. In fact, the median college-educated millennial with student debt is only earning slightly more than a baby boomer without a degree did in 1989.
There’s more. When we baby boomers were young, we owned more homes and had amassed assets worth twice as much as young people today.
The report spawned many articles claiming these figures presented a dire picture for the 75 million millennials struggling for a piece of the American Dream. No wonder so many millennials still live with their baby boomer parents, they pointed out.
So what can we take away from all this? Should we be depressed and worried for our children by this doom and gloom report?
Not in my opinion.
Tackling Student Loan Debt
According to this study, a good part of the reason millennials are worse off than we were at their age is crippling student loan debt.
Americans owe nearly $1.3 trillion in student loan debt, spread out among about 44 million borrowers. In fact, the average Class of 2016 graduate has $37,172 in student loan debt, up six percent from last year.
To make matters worse, this debt is not dischargeable in bankruptcy. As an article from Time states so well: “If you’re struggling to pay credit card debt, car loans or even gambling debt, you can wipe the slate clean in bankruptcy. Struggling to pay your student loans? Sorry, you’ll just have to figure that one out on your own.”
This was not always the case. Older baby boomers will remember that before 1976, all education loans were dischargeable in bankruptcy. Along with much lower college costs back in the day, this is one reason we boomers were better off financially when we were young adults than our children.
Nonetheless, not all is lost. If your millennial children are saddled with this heavy load, there’s some great information out there on how to pay off student loan debt faster. For example, there’s some good information in this article from BankRate you can check out.
In addition, I propose that in light of the times, perhaps it’s time we change our thinking about the value of an elite private institution. If we’re truly honest with ourselves, isn’t the motivation for attending expensive, elite schools often prestige? But is it worth it? The sluggish economy and rising costs of college have intensified questions about whether that fancy education is worth it. Are graduates more satisfied with their lives afterward or are they stressed out over the massive student debt they’ll carry for years?
If our children are thinking about taking out loans or co-signing student loans for their own children’s college education, these are questions they should consider. Parents need to make sure that this financial investment is indeed worthwhile and not made to the detriment of their own future well being.
An article from Wall Street Journal pointed out that “as student-loan default rates climb and college graduates fail to land jobs, an increasing number of students are betting they can get just as far with a degree from a less-expensive school as they can with a diploma from an elite school—without having to take on debt.”
Perhaps that’s why more students are choosing lower-cost public colleges, state schools, commuting to schools from home to save on housing expenses, as well as choosing a more practical career-oriented education.
Food for thought for our grandchildren as they approach college age.
Money Does Not Equal Happiness
So, maybe our children are earning less, haven’t purchased a home yet, and don’t have as much money as we did when we were their age.
Does that mean they’re doomed to misery? Heck no!
As I wrote about in a previous blog, How the Recession Changed Our Viewpoint of Happiness, if this recession taught us anything, it’s that money, expensive houses, and things doesn’t equal happiness.
Maybe the American Dream has changed since we were young – and that’s not a bad thing.
Remember the 60’s, when many young people thought society had been corrupted by capitalism and the materialist atmosphere it created? They looked down on their parents, children of the Depression era who sought security in cookie-cutter houses in the suburbs, enjoying an economic boom after World War II ended. Their parents were “square” and “materialistic” in their youthful eyes, and had lost sight of the more meaningful experiences life had to offer.
Then they grew up.
Let’s get real. Many of those ideals were left behind. Ironically, many “hippies” became “yuppies.” Despite all the talk and protests, a lot of baby boomers began working around the clock at burgeoning careers, bought nice homes, enjoyed fancy vacations, chased success, and accumulated credit card debt. In the end, many boomers became much more materialistic than their parents.
Well, it seems the pendulum has swung once again. After the recession, many young people are feeling the same way we boomers did in the 60’s.
After all, many people bought extravagant homes they could not otherwise afford and lost them during the housing bubble burst. You know what? They learned life went on. Buying that home they always “dreamed of” turned into a nightmare and many discovered it wasn’t worth all the stress that resulted.
Turns out that dedicating yourself to a career and owning a fancy home wasn’t the answer to finding contentment, satisfaction, and joy after all. Many of our children took note.
In fact, home ownership rates are at their lowest since 1995. In the years since the housing bubble burst, many have come to the conclusion that home ownership isn’t everything it’s cracked up to be and are now renting a less expensive apartment instead. Others opted for home ownership, but decided to downsize. This idea spawned the whole tiny house movement.
So, maybe our millennial children don’t own a home and are renting an apartment instead. Is that such a tragedy? Without a huge mortgage debt hanging over their heads, they’ll have more time to concentrate on spiritual matters, their family and friends, volunteer work, and their health and well-being. Maybe our children don’t have a demanding cooperate job earning big bucks. Perhaps they’ll have more freedom for new experiences, adventures, and seeing the world.
Whose to say they can’t be happier without all the materialistic entrapment that the so-called American Dream entails?
Do you have millennial children living with you? You’re not alone. Statistics show that 21 percent of millennials live with their parents.
However, that doesn’t have to be a negative thing.
Shortly after my youngest son got married, he was forced to move back home. He was laid off during the recession and his wife was working at a dental facility that closed down. They lived with us for a few years until they got back on their feet and recently moved up north.
My oldest son doesn’t match the data from the Federal Reserve used for this latest study. He actually earns more than my husband and I. However, because of child support for his three children and substantial legal debt from from his recent divorce and custody battle, he is currently living in a casita on our property. This works well for us as well, since we share living expenses.
This is not an uncommon scenario in this recovering economy. According to a survey by the Pew Research Center, three in 10 parents of adult children report that the economy forced their grown child to move back in with them in the past few years.
Because of this phenomena, the term “boomerang kids” has been coined. To be clear, I’m not talking about kids who move back home and take advantage of you. Adult children who are lackadaisical about finding work, view your house as a permanent vacation spot, and use their earnings as disposable income to be used for going out, expensive trips, or sports cars. That’s a totally different situation.
However, if your children are living at home to pay off some student loan debt, are saving to buy a house, temporally out of work, or recovering financially from a divorce like my son, moving back home doesn’t have to be a negative experience. Helping your children regroup so they can live an independent life once again, if handled correctly, can be a rewarding experience. The fact is, studies show that people who live in multi-generational homes actually like it. Check out my blog, When Adult Children Move Back Home, for tips on how to make multi-generational living work.
In conclusion, baby boomers, let’s not cry a bucket of tears for our millennial children. Yes, they face some challenging times. But I have faith that, all in all, they’ll find their way and do just fine.
Images, in order of appearance, courtesy of jannoon028, renjith krishnan, Stuart Miles, and photostock at FreeDigitalPhotos.net.
Julie, our family experienced just about everything you describe about Millennials: boomeranging back home, crushing college debt, even delaying or sidestepping marriage. They also have challenges getting jobs in their career field and take lower-paying jobs outside their field to make ends meet. I, too, have confidence they will work it out. My main concern is their debt….not easy to save money when paying of big college loans.
You tell a very common story, Cat. Many boomers’ children are experiencing the same things. My son doesn’t have college debt, but at the age of 36 is carrying a similar amount of legal debt from his custody battle. Just taking it a day at a time and paying it down bit by bit. As I said in the article, while many of our adult children share this burden, I have faith in the younger generation that they will find a way.
I don’t have children so this is not a situation I’ve had to deal with, but I couldn’t help but think back to my own life because I had been awarded an art scholarship but rather that incur debt, or continuing to live home even one more day, I opted to go to work for a bank. That surely was a major turning point in my life, but not one that I’ve regretted. I like your common sense advice and can think of several friends you will enjoy your article. Thanks for the inspiration!
Thanks for stopping by and sharing your experience, Marquita. I’m glad you made a decision that worked out so well for you so you didn’t suffer some of the consequences I mentioned in the article..
Fascinating Julie- We were just talking about Millenials her in Australia and how they expect so much so quickly as their parents have told them they can be anything they want to be. The student loan debt i don’t think is as crippling in Australia . What struck me was Money Does Not Equal Happiness that is so true – happiness come from with in xx
Thanks for sharing your thoughts from down under, Suzie. Interesting that you don’t have the student debt dilemma we are experiencing in this country. It’s a huge problem here. But I could not agree more, happiness comes from within and does not depend on money, an expensive home, or things.
This was an insightful and informational read. I have not experienced this first hand but find it fascinating to reflect on our societal evolution. And the continual search for happiness….
So glad you stopped by and shared your thoughts, Teresa. It is interesting to look back at the past several decades and see how our attitudes and the way we live our lives has changed. Hopefully, we’re learning along the way!
I look back now and realize how lucky I was. I was able to go to a major university and with the help of state funding, I was able to pay for my entire 4 year degree without debt. Today, that same university has had its state funding cut drastically, as many schools have, and students graduate with enormous debt. It’s the private companies that took over student funding that lobbied Congress not to allow student debt be part of bankruptcy discharge. Where’s the profit in that? It so interesting by comparison that Germany is offering free university education to any student who comes to study there.
Joyce, you explained the problem with our student debt problem so well. We baby boomers had it a lot easier “back in the day.” Thanks so much for sharing your insights.