This Age Group Is the Most ‘Financially Stressed’: Here’s Why — And What They Can Do About It

Woman with debt.
damircudic /

Everyone is facing increased financial stress in the face of skyrocketing inflation and rising interest rates. But there’s one age group that seems to be having it worse than others: older millennials, those born closer to the 1981 end of the age spectrum, are perhaps the most stressed age group of all of them right now. 

Many of these millennials entered the workforce during the Great Recession, which affected their earning potential and career trajectory, according to Andrew A. Lokenauth, financial expert and founder of the website, Be Fluent in Finance. This left them improperly prepared for financial responsibilities, with a gap in their financial knowledge about investing, not to mention just the sheer onslaught of repeated economic crises.

Here we look at some of the other reasons why they’re so financially stressed, and how to mitigate it.

Little Disposable Income

Millennials are torn between paying off student loans, raising children, trying to live the American dream of home ownership and helping care for aging parents, said Julian Morris, CFP, with Concierge Wealth Management.

“When you combine this, it equals little disposable income and a lot of stress in all directions of the family tree.”

Psychological Impact of Comparisons

Beyond the well-known financial burdens, older millennials also often face psychological stress exacerbated by social comparisons, according to John Browning, founder and CEO of Guardian Rock Wealth.

“The pressure to achieve traditional milestones set by peers or societal expectations can intensify financial stress. Encouraging individuals to focus on their unique financial journey and set personalized goals rather than comparing themselves to others can help alleviate this aspect of stress,” he said.

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Historic Levels of Debt

Many older millennials are burdened with significant student loan debt from their college or graduate education, said Robin Snell, CFP, owner and chief of planning at Nested Financial. “To mitigate this stress, they can explore options like income-driven repayment plans, refinancing at lower interest rates, and seeking loan forgiveness programs for those who qualify.”

Higher Cost of Living

The financial strain on older millennials comes down to student loans and the ever-increasing costs of living, said Rob Whaley, finance specialist, with the Horizon Finance Group

“Many in this age group are juggling the hefty student debt they racked up during college, seriously tightening their monthly budgets,” Whaley said.

“On top of that, living expenses — like rent, healthcare, and basic needs — keep climbing. These double whammies create a perfect storm of financial stress for Millennials. Dealing with massive debt and trying to make ends meet as costs increase is a unique challenge that hits this generation hard.”

Insecurity of the Gig Economy

More millennials have jumped into the gig economy as a way to earn additional funds, or to work with flexible hours. However, Jenson pointed out that, “Although the gig economy provides flexibility, it sometimes lacks the permanence and perks of traditional jobs, leaving millennials with financial insecurity.”

Uncertain Retirement

Add to that doubts about the viability of Social Security and traditional retirement savings, millennials must save for retirement in an uncertain market, Jenson said.

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“From the Great Recession to the problems of the COVID-19 pandemic, Millennials have faced substantial recessions that have upset their financial goals.”

Seek Out Niche Financial Communities

Millennials shouldn’t worry that they’re forever stuck in financial stress. There are ways to mitigate some of these challenges.

For starters, in the digital age, lesser-known but highly effective are niche financial communities.

Browning said, “Older millennials can benefit from engaging in platforms or groups that cater specifically to their unique challenges. These communities provide a space for sharing unconventional strategies, success stories, and emotional support, creating a sense of camaraderie in navigating financial hurdles.”

Explore Alternative Approaches to Home Ownership

While home ownership is a traditional marker of financial success, there are lesser-known alternatives, Browning explained.

“Shared equity models, co-housing arrangements, and exploring unconventional housing markets can offer more affordable paths to secure housing without succumbing to the traditional pressures of immediate home ownership,” said Browning. “This strategic shift in approach can significantly ease the financial strain associated with housing costs.”

Avoid High-Interest Rate Debt

While debt may be unavoidable, high interest rate debt can be avoided, according to Kendall Meade, CFP at SoFi. She said that one of the most common reasons that people are unable to save or invest is that they have debts they have to pay down first, she said.

“By avoiding high interest rate debts, we can save more, allowing us to reach our goals faster,” Meade continued. “Keep in mind that not all debt is bad debt, so you do not need to have low interest rate debt paid off before saving for retirement.

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“Debts with lower interest rates (common rule of thumb is less than 7%) such as mortgages, car loans, or student loans can actually be leveraged to increase your ability to earn or save, these can just be paid off over time.” 

Beef Up or Create an Emergency Fund

Change your budget so you can begin to save for three to six months’ worth of expenses, Meade recommended. “This can help you ‌get through tough times without having to rack up high-interest-rate debt. Having this emergency fund can also help give you peace of mind.”

Of course, it is important to make sure your emergency fund is safe and accessible, too.

Meade said, “Many people are tempted to invest their emergency funds, but this can be a big mistake. Make sure your emergency fund is earning a bit of interest for you. A higher APY will help your money grow faster. Utilize a high-yield savings account.”

Tend to Mental Health 

Whaley stressed the importance of looking after one’s mental health because “money worries can mess with your head. Practicing mindfulness, getting support, and keeping a balanced life can lower stress levels, making it easier to make solid financial decisions.”

Get Financial Education and Advocate

Jenson recommended that Millennials engage in extensive financial education courses to provide millennials with the expertise and abilities they require to successfully handle their money.

Advocate for legislation that offers benefits such as medical coverage, pensions and job stability to gig economy employees.

Jenson would also advise millennials to begin saving for retirement as soon as possible and to make wise investment decisions, highlighting the potential for multiplying over time.

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