Millennials buy the things their parents did — but they're much poorer
Baby boomers seem to have had an advantage in nearly every financial metric compared to millennials, according to a new study from the Federal Reserve.
- Millennials earn less, own fewer assets and have more debt than previous generations.
- The fact that millennials' spending habits differ from previous generations is best explained by lower earnings and less wealth, rather than changing tastes.
- Some millennials might be too optimistic about their ability to retire early — or on time.
A study published this month from the Federal Reserve suggests the reason millennials are spending money differently compared to previous generations isn't because of their unique tastes, but rather they just don't have much money to spend.
There's a common narrative, according to the study, that says millennials' changing preferences explain why we've seen the recent decline of brick-and-mortar retail stores, home construction and purchases, and new-car sales. But the data indicates that millennials' tastes are pretty much the same as previous generations.
The researchers wrote that "it primarily is the differences in average age and then differences in average income that explain a large and important portion of the consumption wedge between millennials and other cohorts," which included Generation X, baby boomers, the Silent Generation and the Greatest Generation.
In short, millennials show "lower earnings, fewer assets and less wealth" compared to previous generations, and so they're tending to get married and buy cars and homes later in life.
The "lasting impression" of the Great Recession
One distinguishing factor of millennials' coming-of-age story was the recession of 2007, and the weak labor demand that followed. "Millennials appear to have paid a price for coming of age during the Great Recession," the researchers wrote, noting the recession's subsequent weak labor demand.
They added elsewhere: "The severity of the 2007 Global Financial Crisis and the recession that followed may have left a lasting impression on millennials, who were coming of age at that time, much like the Great Depression left a lasting impression on the Greatest Generation."
That lasting impression might manifest in "attitudes toward saving and spending" that could be "more permanent for millennials than for members of generations that were more established in their careers and lives at that time," the researchers wrote.
The study also notes that millennials have about the same levels of debt as Generation X, though more debt than Baby Boomers. However, millennials also have markedly fewer financial assets than Generation X, even though millennials do seem to be saving for retirement more than other generations did at the same ages, a change that likely "reflects, in part, the replacement over time of defined-benefit retirement pensions with defined-contribution retirement accounts."
Do Millennials have realistic expectations about retirement?
It's hard to say for sure, but some data suggests that millennials might be a bit delusional about their future economic standing. A 2018 TD Ameritrade survey, for instance, showed that 53 percent of millennials expect to become millionaires, and they expect to retire, on average, by age 56.
That optimism, as I wrote in July, doesn't seem to reflect the reality forecast by data showing that social security won't be able to pay out full benefits by 2034, the group has a collective student loan debt of more than $1 trillion, and young people are now earning relatively less than previous generations — a difference that's likely explained, in part, by more participation, particularly among women, in the workforce.
Still, millennials don't need to worry too much, as long as they're willing to work hard, save and push back retirement by a few years, as Alicia H. Munnell, director of the Center for Retirement Research at Boston College, wrote in a Politico article on millennial retirement.
... My research shows that the vast majority of millennials will be fine if they work to age 70," Munnell wrote. "And although that might sound old, it's historically normal in another sense: Retiring at 70 leaves the ratio of retirement to working years the same as when Social Security was originally introduced.
To create wiser adults, add empathy to the school curriculum.
- Stories are at the heart of learning, writes Cleary Vaughan-Lee, Executive Director for the Global Oneness Project. They have always challenged us to think beyond ourselves, expanding our experience and revealing deep truths.
- Vaughan-Lee explains 6 ways that storytelling can foster empathy and deliver powerful learning experiences.
- Global Oneness Project is a free library of stories—containing short documentaries, photo essays, and essays—that each contain a companion lesson plan and learning activities for students so they can expand their experience of the world.
This is what the world will look like, 250 million years from now
To us humans, the shape and location of oceans and continents seems fixed. But that's only because our lives are so short.
The future of education and work will rely on teaching students deeper problem-solving skills.
- Asking kids 'What do you want to be when you grow up?' is a question that used to make sense, says Jaime Casap. But it not longer does; the nature of automation and artificial intelligence means future jobs are likely to shift and reform many times over.
- Instead, educators should foster a culture of problem solving. Ask children: What problem do you want to solve? And what talents or passions do you have that can be the avenues by which you solve it?
- "[T]he future of education starts on Monday and then Tuesday and then Wednesday and it's constant and consistent and it's always growing, always improving, and if we create that culture I think that would bring us a long way," Casap says.
These Jurassic predators resorted to cannibalism when hit with hard times, according to a deliciously rare discovery.
- Rare fossil evidence of dinosaur cannibalism among the Allosaurus has been discovered.
- Scientists analyzed dinosaur bones found in the Mygatt-Moore Quarry in western Colorado, paying special attention to bite marks that were present on 2,368 of the bones.
- It's likely that the predatory carnivore only ate their already-dead peers during times when resources were scarce.
As a doctor, I am reminded every day of the fragility of the human body, how closely mortality lurks just around the corner.