Boomers vs. Millennials: A Look at the Financial Gap Between Generations

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When it comes to finances, millennials have it rough. Data shows that members of this generation — people born in 1981 to 1997 — are saddled with student loan debt, delaying major milestones such as homeownership and less financially secure than their parents, the baby boomers.

And, based on the results of a recent survey from GOBankingRates, millennials have certainly noticed that their path to the American dream seems much more difficult than that of generations that came before. The poll asked some 995 millennials about the economic climate for millennials and about two in three said millennials have had it worse than their parents and other prior generations.

Read: Reasons You’re Still Living Paycheck to Paycheck

They might now be on the verge of becoming the largest generation, but are millennials really worse off than boomers were when they were young adults? Are their perceptions about how baby boomers vs. millennials have had it on point or at odds with the underlying data? Here’s a look at the financial differences underlying the question of who’s really had it worse — boomers or millennials.

Last updated: March 23, 2021

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Millennials Have Higher College Costs

It’s no secret that the cost of college has been rising. A GOBankingRates analysis found that the annual cost of a four-year public university has soared more than 3,700% between 1964 when the youngest boomers were born, and 2015. So when those boomers entered college at age 18 in 1982, the average annual tuition at a public school in current dollars was $1,031, and the average cost of a private college was $4,639. When the oldest boomers were in college in 1964, the average annual cost of a public school was just $243, and the average annual cost of a private school was $1,088.

Flash forward to today. The youngest millennials are paying an average of $9,970 for yearly in-state tuition and fees and $25,620 for yearly out-of-state tuition and fees at four-year public universities, according to the College Board. The average annual cost of tuition and fees at a private school is $34,740. And that hasn’t gone unnoticed. In the GOBankingRates survey of millennials, a whopping 70% of millennials felt their generation has had the hardest time affording college.

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But Are They Really the Ones Paying Them?

But millennials aren’t shouldering these costs on their own. During the 2016-17 academic year, for example, scholarships and grants covered 35% of college costs, according to Sallie Mae’s 2017 “How America Pays for College” study. Parent income and savings covered an additional 23% of the tab, and parent borrowing paid for another 8%. Contributions from relatives and friends took care of 4%. In total, student borrowing covered 19% of costs — up almost 50% from the 2016 study — and student income and savings covered 11%.

However, before you jump to the conclusion that it’s actually boomers shouldering the cost of college for their millennials children, consider a LendEDU survey of some 1,400 college graduates from 25 to 54 that showed that just 9% got a majority or more of their college funding from their parents, and 45% got no help at all.

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Millennials Are Graduating With More Student Loan Debt

Many Millennials who have gone to college face a bigger obstacle than boomers did when graduating: student loan debt. “Higher college costs and bigger student loan debt put millennials at a disadvantage compared with boomers,” said Saul Simon, a certified financial planner and president of Simon Financial Group.

The average student loan debt per borrower in 1989 — when boomers were in their 20s and 30s — was less than $2,000, according to the Urban Institute. In 2015-16, bachelor’s degree recipients who borrowed money graduated with an average of $28,400 in student loan debt, according to the College Board.

More than 40% of millennials report having student loan debt compared with 13% of boomers, according to a study by Aon Hewitt. However, boomers are helping their millennial children pay down their debt.

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… And Getting Less for Their Debt

Taking on student loans might be pricey, but student loans are likely still worth it in the long run. A 2015 study conducted by Georgetown University’s Center on Education and the Workforce concluded that the lifetime wage difference between high school and college graduates was $1 million.

But today’s economy might also make it less of a luxury and more of a necessity as the sort of work that people without a college degree can find appears to be dropping in quality and the earnings gap continues to trend upwards. A college graduate earned 56% more than someone without a college degree in 2015, according to the Economic Policy Institute, up from 51% in 1999 and the highest level it’s been since 1973.

What’s more, the Young Invincibles study found that millennials with a college degree and student debt earned about the same amount as a boomer with no college degree in 1989.

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The Job Market Has Been Tough for Both Generations, but Worse for Millennials

One of the biggest financial challenges millennials have faced is a tight job market, Simon said. The 2017 unemployment rate among young millennials ages 20 to 24 was nearly 70% higher than the national unemployment rate — 7.4% versus 4.4%, according to the Bureau of Labor Statistics. And there was a slightly higher percentage of unemployed older millennials ages 25 to 34 than the overall population — 4.6%.

But boomers didn’t have it much better when they entered the labor force. In fact, it was worse for some of them. Because of their large numbers, boomers had unemployment rates that were higher than for older workers, according to the Bureau of Labor Statistics. In addition:

  • The average unemployment rate among the youngest male and female boomers in 1969 was 5.7%, whereas the national unemployment rate was 3.5%.
  • The unemployment rate among boomers who were in their early 20s in 1979 was 9.2%, compared with a 5.8% rate across all workers.
  • And 8.6% of the youngest boomers were unemployed in their early 20s in 1989, compared with 5.3% of all workers.

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Economic Conditions Favor Boomers, but Not by Much

Neither boomers nor millennials have experienced a lot of luck with the economy. There were four recessions from the mid-1960s to the mid-1980s when boomers entered adulthood and the workforce. Millennials, on the other hand, have been through two recessions — one in 2001 and the Great Recession from 2007 to 2009 — but in a much shorter period of time.

What’s more, the Great Recession was, in many ways, much worse than anything the boomers had to experience in the early years of their careers. The recession in the early 1980s, for instance, did produce similar levels of unemployment to the Great Recession, but it didn’t last nearly as long. That recession produced two full years plus another two months of unemployment rates over 8% — from November 1981 to January 1984. Compare that with the three and a half years of 8%-plus unemployment that millennial job-seekers experienced from February 2009 to August 2012.


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Despite the Data, Millennials Believe They’re Getting It Much Worse Than Boomers

Although there’s clearly an argument to be made that boomers actually dealt with a more challenging job market, the GOBankingRates survey revealed that millennials firmly believe they’re getting the tougher slog. When asked if they’re facing a worse economic climate than previous generations, 55.7% of respondents either agreed or strongly agreed. And for the questions of which generation is facing the toughest job market, roughly half of millennials felt it was their own age group.

That could be understandable, though. Millennials are too young to remember the energy crisis and stagflation of the 1970s, and they’re much more likely to have a clear memory of the later stages of their parents’ career, long after they dealt with their generation’s biggest economic problems.

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Millennials Earn Less Than Boomers Did at Their Age

The stagnation in wages in America has hit millennials hard. In fact, this generation actually is worse off than its boomer parents. A 2017 report by the advocacy group Young Invincibles found that millennials earn $10,000 less than their parents did when they were young adults.

Young Invincibles compared earnings of boomers ages 25 to 34 in 1989 with earnings of millennials ages 25 to 34 in 2013. Adjusted to 2013 dollars, boomers earned $50,910 annually, yet millennials earned just $40,581.

That could help explain why the millennials survey from GOBankingRates reported relatively low incomes, with about a third revealing that they earned less than $25,000 a year and over half earning under $50,000.


Millennials Are Less Likely To Own Homes

Homeownership is considered to be part of the American dream, and for many millennials, it’s just that — a dream. A smaller percentage of this generation owns homes than boomers did when they were in their 20s and early 30s — 43 percent versus 46 percent, according to Young Invincibles. Part of the problem is student loan debt, and another would be that home prices have increased 250 percent since 1980.

“Student loan debt is a tremendous burden that holds many millennials back from purchasing a house,” said Clint Haynes, a certified financial planner and president of NextGen Wealth. “Also, as we have seen over the last 40 years, wages have not kept pace with inflation or home prices, which also makes it difficult.”

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But Getting a Mortgage Is Actually More Affordable

Millennials who do own homes are fortunate, though — they don’t have to contend with the high mortgage rates boomers faced in the 1980s. Throughout most of that decade, the 30-year fixed mortgage rate was above 10%, reaching as high as 18.45% in October 1981, according to Freddie Mac.

And based on Zillow’s mortgage affordability index — which looks at what percentage of the median income level is taken up by an average mortgage — millennials are actually entering a housing market that’s much better than the one faced by their parents. The average from 2008 to 2018 has been 15.1%, lower than it was for any single quarter going all the way back to 1979.


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Millennials Are Now More Likely To Live at Home

Today, millennials are actually more likely to live at home with their parents than live in their own home. At no other time over the past 130 years has a greater percentage of young adults ages 18 to 34 lived with their parents, according to a Pew Research Center analysis.

But there’s plenty of reason to believe that the explanation for this is tied to the fact that the entire housing market — purchases and rentals alike — are combining to make it harder for young adults to leave the nest. Millennials under the age of 25 are spending 7.7% more on housing than boomers were at the same age, indicating that even getting that first apartment could be significantly harder for this generation than for the previous ones.

The millennials survey from GOBankingRates did poll its 995 respondents on their living situation and appeared to reflect this reality in their responses. Roughly half of the respondents were renting and another quarter still lives rent-free with family or friends. Just 26.1% of those in the survey own the place where they live.

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Healthcare Costs Are Heftier Now

When boomers were in their 20s and 30s, healthcare spending was just a fraction of what it is today. Annual health spending has risen from $147 per person in 1960 to $9,255 in 2013, according to the Centers for Medicare and Medicaid Services.

Plus, healthcare spending has grown at a faster rate than personal income. In 1960, health spending accounted for 4% of household expenditures as a share of income. By 2013, it was 6%.

Thanks to the Affordable Care Act, though, millennials can cut healthcare costs by taking advantage of their parents’ insurance coverage. Insurers are currently required to let children stay on their parents’ policies until age 26. Boomer parents, on the other hand, have to foot the bill for family coverage.


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Most Millennials and Boomers Don’t Have the Benefit of Pension Plans

You can still find some jobs that come with a pension. But by and large, millennials can’t count on this guaranteed source of income in retirement. Most boomers can’t, either.

In 1975, nearly 90% of private sector workers with retirement benefits were covered by a pension plan, according to the Investment Company Institute. But a change in IRS regulations started a shift in the 1980s from defined benefit — or pension — plans to employer-sponsored retirement plans, which allowed employees to make voluntary contributions. As of 2016, just 18% of private sector workers had access to a pension plan, according to the Bureau of Labor Statistics, and the Insured Retirement Institute found that only one in four boomers expects to get significant income from an employer-provided pension in retirement.

A pension is hardly necessary to a happy retirement, though, as long as you are making regular contributions to your retirement plan. For millennials, Haynes sees the decline of the pension as a benefit rather than a disadvantage. “They’re more in control of their own destiny,” he said. “They’re not tied to a company pension plan. They have the opportunity to have many different employers, but it’s up to them to save for their own retirement.”

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Neither Millennials nor Boomers Are Saving Enough for Retirement

The problem is neither millennials nor boomers are doing a good job of saving for retirement. The GOBankingRates 2018 Retirement Savings survey found that 39.2 percent of millennials have less than $10,000 saved for retirement compared with about a quarter of boomers, meaning more than 40 percent of all Americans will retire broke.

Most boomers who are worried about whether they’ll have enough for retirement say they would have saved more if they could go back and do things differently, according to the Insured Retirement Institute survey. Millennials still have time on their side to save enough money to retire rich.

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Millennials Aren’t Optimistic About Retirement, Though

However, Haynes said he doesn’t see retirement as millennials’ endgame. Instead, they want to achieve financial freedom.

“It could mean retirement, but for many, it means being able to do what it is they want to do when they want to do it,” he said. “It means not being tied down to a boss, but rather creating opportunities for themselves for what it is they care about — whether it’s a side hustle, creating a job they’re passionate about or giving back to their community.”

That’s good because although some of the failure to save more for millennials could be by choice, the GOBankingRates millennial survey clearly shows that they see their prospects for ultimately retiring comfortably as being relatively bleak. Some 58.7% of those polled felt that they would have a harder time than those generations that came before them.

Granted, that has to be put in context: Millennials can’t really know what their situation will be another 30 years from now while many boomers are right in the thick of either the early years of their retirement of the final years of their career. But the lack of confidence among young adults that they’ll be able to build an adequate nest egg is still important to note.

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Boomers vs. Millennials: Who’s Had It Worse?

It would be impossible to arrive at a definitive answer in terms of who has had it worse, especially with so much more time to go before millennials can really know the full story of their economic journey. While memories of the Great Recession are still painfully fresh for many, the current economic boom is adding another chapter to that tale. If things continue like they are for another decade, millennials might ultimately wind up living through some of the strongest economic conditions in American history.

Economics can be an incredibly frustrating discipline if you’re looking for certain answers, and comparing conditions across generations isn’t going to change that. So, it appears this will continue to be a subject of debate at Thanksgiving for years to come.

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    Joel Anderson contributed to the reporting for this article. Data is accurate as of May 3, 2019.