Millennials have had an interesting time economically, and it hasn’t been particularly fair to them. The idea of Achieving the American dream and becoming rich is becoming increasingly unlikely. A growing number of millennials are financially supporting their parents, but at the same time many are still moving back in with their parents. Student debt is crippling their future. And to top it all off millennial consumers want McDonald’s to be more like Chipotle. These are the top millennial stories of the past 30 days.
See Also: July Millennial Data
1. Will Millennials Ever Achieve American Dream?
It may be cliché to utter the words "it was better back in my day," but this seems to be the case for this generation. At least according to a new study by a group of U.S. economists.
A new study by the St. Louis Federal Reserve entitled "The Demographics of Wealth" suggests that millennials are poorer than young people ever were before, and they may not be able to reach a high level of wealth as they get older.
The research found that there is a tremendous "wealth gap" between millennials and seniors, and this has widened every single year. One in seven Americans older than 65 is more likely to accumulate a minimum of $1 million for retirement, a lot more than those under 40.
Researchers purport that since the days of the Baby Boomer generation, incomes have dropped significantly as well as expectations of attaining wealth in their lifetime. Economists released an example: people born in 1970 have an income that is one-quarter less, and 40 percent less wealth than individuals born in 1940.
However, the U.S. central bank does note that younger families have always been squeezing every penny. It makes sense: when you’re 25 years old with a wife and child you’re not going to have a $1 million bank account and spending money on Ferraris, private school and a mansion. With that being said, the report authors suggest millennials start emulating their older family members.
"Young families that want to increase their chances of being wealthy should emulate the financial decision-making of older families: maintain an emergency fund, pay down debt, put extra money in high-return investments, such as stocks, etc. Delaying the purchase of a house can also help in multiple ways."
2. Millennials Giving their Parents a Helping Hand
Since the financial crisis, we have always been told that millennials are a bunch of freeloaders who lean on their parents for every single whim. Well, it turns out that a growing number of millennials are returning the favor and beginning to financially support their mom and dad.
A new TD Ameritrade study discovered that 22 percent of Americans are providing financial support to an older parent or an adult child, and in many cases it’s both. The average annual cost is $12,000, in addition to the various costs of maintaining a household.
The most interesting statistic in this study is the fact that one-fifth of millennials are offering monetary assistance to their parents. This completely dispels the myth of adults in their 20s and 30s living in their parents’ basement.
Generation Xers are usually referred to as the "sandwich generation" since they are looking after both their parents and their adult children. And this is costing plenty: $630 billion.
"It’s a situation where some people are going to have to work longer than they had expected or wanted to or they are going to have to do some penny pinching…and maybe reallocate," one study author noted.
Here are a few other results the study reported:
- 83 percent would rather support an aging parent instead of an adult child.
- 69 percent say they’d support their grown children until they find well-paying jobs.
- 52 percent concede to not saving or investing like their parents.
- 33 percent don’t think they’ll have a financially secure future like their parents.
- 30 percent are making sacrifices to support their aging parents.
3. Returning to the Nest in Adulthood
With a large number of millennial adults looking after their parents, roughly the same number is moving back in and depending on their parents.
Pew Research Center released a report that found 26 percent of millennials in the first quarter of 2015 were living with their parents, up from 24 percent in 2010. Using data from the U.S. Census Bureau, Pew compared 2010 to today, and the results surprised researchers.
For youth, the unemployment rate now stands at about 7.7 percent, down from 12.4 percent in 2010. Pew defines millennials as being between 18 and 34. If millennials are working then why are they living at home?
It’s estimated that 25 million millennials are at the helm of their own households today. That is down from the estimated 25.2 million before the economic collapse in 2007.
"The pattern of household formation has become unglued from the job market," said Richard Fry, senior economist at Pew, in a statement. "This is concerning because ... there’s a lot of spending that goes with setting up households. Young adults are not establishing more households, and that’s proving to be one of the drags on the housing recovery and the larger economy."
The research didn’t delve into the reason why the number of millennials returning home has gone up. But researchers note that it’s likely two reasons: it has become socially acceptable to live at home and skyrocketing student debt loads.
4. Why Can't McDonald's be More Like Chipotle?
McDonald’s is stuck between a rock and a hard place. It’s in disarray as it attempts to welcome back younger consumers, a demographic that has decidedly turned its back on the golden arches and home of the Big Mac. Instead, millennials are looking for healthier alternatives, including Chipotle.
Despite the various changes McDonald’s has made - fewer antibiotics, healthier choices and automated technology - it doesn’t seem to be helping. Is the McDonald’s brand damaged forever?
Ypulse, a youth marketing research firm, released new data last month. It polled 1,000 millennials between the ages of 13 and 32 and asked two questions: "What would make you eat more often at McDonald’s?" and "What would they have to change or improve?"
The answer the respondents gave: Be More Like Chipotle.
Most respondents are worried about the food being offered at the world’s biggest chain. The solution for McDonald’s, according to the millennial participants, is to spend more time on the nutritious value of the food being served instead of technology upgrades.
Millennials provided a list of five solutions to help McDonald’s return to prominence:
- Upgrade food quality
- Cut the fat and calories
- Eliminate artificial ingredients
- Provide more variety
- Start serving burritos
5. Adulthood is Being Delayed Because of Debt
Student debt is the bane of a millennial’s existence. Due to the high level of student debt, millennials are forced to delay major purchases, like homes and cars and postpone huge life changes, such as marriage and having children.
A new Bankrate.com survey reported that 45 percent of respondents who ever had student debt had to delay anything significant from happening in their lives. Moreover, debtors between 18 and 29 today help boost that number to 56 percent.
One of the reasons for the immense level of debt is the lack of information, says respondents. Today’s generation of borrowers say they didn’t receive enough information about student loan debt when they entered college: 66 percent to 34 percent.
"Most families are not advised through this process. The decision to take on this debt is largely made based on the fact that this is the only way to pay," said Allan Katz, president of Comprehensive Wealth Management Group, in a statement. "The key is to plan properly early so that you can reduce the amount of debt you are taking (in) the first place."
Although it would be prudent to delay life events until the debt is paid off, one personal finance expert argues quite the opposite. Niv Persaud, CFP professional for Transition Planning & Guidance, posits not to put off anything substantial but at the same time they must pay off this debt in a timely fashion to build their credit score.
See Also: June Millennial Data
The data over the past 30 days paints a complicated picture of millennials. On one hand, millennials are independent and helping their parents. On the other hand, millennials are mooching off of their parents. Whatever the case, millennials are at least gradually returning to some sense of normality as the labor market picks up, and they pay their debts. What will the next 30 days bring for millennials?
What is your opinion of this data of millennials for the month of August? Let us know in the comments section...