Millennials Struggling To Save Despite Economic Upturn
Savings rates of millennials increased sharply during and after the 2008 financial crisis, from -15 percent to 5 percent, but that number has declined steadily since 2012, despite recent job growth and positive economic indicators.
Older Americans are saving at a rate of between 3 and 13 percent, but Americans under 35 are saving about -2 percent, reported The Wall Street Journal, leaving them exposed to unexpected economic downturns and events.
“They are truly a vulnerable group,” Annamaria Lusardi, an economist at George Washington University told the WSJ. “They don’t have assets to buffer themselves against shocks, and they also have to manage debt.”
While some young Americans probably choose not to save, the low rate suggests many are unable to save due to financial instability or debt burdens, or a low income.
More than 10 percent of workers 20 to 24 are unemployed, despite a national unemployment rate that fell to 5.8 percent in October. Borrowers under 35 have median student debt of $17,200, nearly triple the median for the previous generation of $6,100, according to Fed data reported by the WSJ.
And despite positive economic indicators and recent job growth, wages have largely remained stagnant. Americans under 35 in 1995 earned higher wages, adjusted for inflation, than millennials do, and had a median net worth of $18,000, compared to millennials’ median net worth of $10,400.
“There’s people who really can’t save because they don’t have the means to save, and that’s not a small group of people,” Shai Akabas, an economist at the Bipartisan Policy Center, told the WSJ. “If you’re in a $25,000-a-year job and starting a family, it’s going to be very hard to accumulate savings regardless of your consumption decisions.”
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