- In the 2010s, millennials struggled to build wealth amidst the fallout of the recession and student-loan debt.
- But one expert thinks millennials will come out on top in the 2020s and finally gain financial footing for five key reasons.
- Millennials are likely to enter their peak earning years and become members of double-income households, receive a wealth transfer from their parents, buy a home, and overcome their student debt.
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The past 10 years have seen millennials cope with myriad financial hardships, but there might be a brighter future waiting for them in the next decade.
The 2008 financial crisis left many millennials financially behind: The oldest have been playing catch up in wealth building after entering a tough job market, while the youngest became risk averse by watching the recession unfold. And both age groups have had to balance this all with the weight of student-loan debt.
But Jason Dorsey, a consultant, researcher of millennials, and president of the Centre for Generational Kinetics, told Business Insider that he anticipates many positive financial changes for millennials – who will be nearing their mid-30s to age 50 in 2030 – over the next 10 years. According to Dorsey, the generation will finally find its financial footing for five key reasons:
- The average student-loan debt per graduating student in 2018 who took out loans is nearly $US30,000. But millennials will be 15 or more years past traditional college age on average, and many will have figured out how to manage their student-loan debt, Dorsey said.
- Many millennials will enter the mid-career stage over the next decade, which Dorsey said is prime time for increases in earnings through promotions and career changes. Mid-career is typically the stage in which one earns the top tier of their income.
- “The Great Wealth Transfer” will see an estimated $US68 trillion pass down from boomers to their millennial children over the next 30 years – and it could make them even richer than previous generations. Dorsey said it’s likely this significant wealth transfer will begin in the 2020s.
- Millennials have traditionally delayed homeownership as they have struggled with debt and living costs, but they’re set to fuel the US housing market in 2020. Dorsey has also seen signs that millennials are finally buying houses, an investment that historically leads to wealth creation, he said.
- Financial troubles have also caused millennials to delay marriage, but as they age, they’re becoming more ready to commit. As a result, more millennials are teaming up into two-income households, which Dorsey said is another positive sign for wealth building.
“The next 10 years may finally be the decade where millennials feel a more solid financial foundation, especially after the long economic headwinds and recovery many of them have faced due to the Great Recession, wage stagnation, rising cost of real estate, and student-loan debt,” Dorsey said.