Living with credit

Millennials’ financial health is on the rocks

Kelly Dilworth

In a New York Times magazine article posted Tuesday, economics reporter Annie Lowrey posed a question that I’ve thought about often: “Do millennials stand a chance in the real world?”

According to mounting research, odds are it’s going to be tough.

The unemployment rate (non-seasonally adjusted) for 18- to 29-year-olds is currently 12.5 percent, according to the advocacy group Generation Opportunity. A record number of Americans under the age of 35 (at least 40 percent, according to the Pew Research Center) are still grappling with student loan debt. Millennials' financial health is on the rocks. Will their parents make it worse?
Income growth is stagnant, making it tough to repay those loans. Fewer young adults are buying new homes and cars, while many are spurning credit cards, according to multiple reports — a sign that millennials are either thriftier than most or, as Lowrey points out, more financially anxious.
It’s enough to make even the most persistently optimistic wary of their financial futures.
Now, a fresh string of reports released this month are adding to the angst.
Young adults have amassed substantially less wealth than their parents did at the same age, according to a report released March 15 by the Urban Institute.
The key takeaway of that finding, say researchers, is that less wealth now means that today’s young adults could have a much harder time saving enough to support themselves in retirement — a scary prospect considering that virtually no one expects Social Security to look the same by then.
But that’s not all that today’s young adults have to fret about. Another looming financial burden is dragging down their economic prospects, according to a twin set of Census Bureau reports released March 21: the ailing financial health of their parents.
Between 2000 and 2011, median household net worth dropped by 16 percent, according to one of the reports.
During the same period, the number of households with at least some kind of debt fell. However, those households still in debt by 2011 borrowed substantially larger amounts than in the previous decade.
Older Americans were in especially bad shape, the survey found. For example, the median amount of debt (including mortgages) carried by a household headed by someone aged 45 to 54 hit $86,500 in 2011.
Americans on the cusp of retirement didn’t do much better. Households headed by someone aged 55 to 64 shouldered a median debt load of $70,000.
Even retirees fared poorly, compared to how they were doing 12 years prior. The amount of debt carried by households headed by someone 65 or older more than doubled between 2000 and 2011.
Most media reports covering the Census Bureaus’ releases have focused on the strain these heavy debt loads will have on older Americans’ ability to comfortably retire.
What the reports missed is the trickle-down impact that increased debt could have on their adult children, who will have to take care of financially fragile parents as they age.
As many experts have pointed out in recent days, a number of older Americans are worse off, in part, because they’ve been helping their children — or, in some cases, grandchildren — get a leg up in a tough economy, either by taking on more debt to help pay for college or by letting them move back home.
Now, the tables may be turning and it’s an open question whether millennials (and Generation Xers for that matter) will have the financial resources to become the caregivers they wish they could be for their aging, cash-strapped parents.
As many caretakers know, it’s not an easy question. Old age is expensive. (Just ask anyone who’s had to shell out more than $3,000 a month for a decent room in an assisted living center.)
And the financial costs of caring for an aging parent often extend beyond just helping out here and there with residential expenses or other costs of living. In some cases, children who care for their aging parents have to quit their jobs in order to provide full-time care, according to a MetLife study on the subject.
As a result, today’s young adults may soon have to ask themselves: If you’re so far behind with your finances that you’re not sure you’ll be able to cover your own retirement without help, how are you supposed to help your parents cover theirs?
So far, the answer isn’t clear. If you’ve found a way around the problem, I’d love to hear it. How have you shouldered the financial burden of aging parents? What do you think young people should do now to prepare?

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, we ask that you do not disclose confidential or personal information such as your bank account numbers, social security numbers, etc. Keep in mind that anything you post may be disclosed, published, transmitted or reused.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

  • Anonymous

    If only we had a FRACTION of the money that we send to foreign countries,- especially those who hate our guts, we would have a better chance of helping our own who have worked hard, served and sacrificed to earn this peace of mind in their retirement years.