Why 40-Year-Old Millennials Are So Much Broker Than Their Parents

If you are turning 40 this year, by some metrics, you are actually the oldest kind of millennial! Really! If you’re reading this, you’re probably already aware that millennials are doing much worse financially than many other age groups, but did you know that also includes those of us about to enter middle-age?

A new analysis, from Bloomberg, reveals that millennials are doing worse financially than Boomers and Gen Xers “in almost every way measurable.” And that includes people who are 40 years old. But why?

The primary culprit is student debt. A greater share of millennials have it—double that of Gen Xers at the same age—and they have more of it, an average of $19,000 instead of $12,800. These debts follow people around for years, of course, limiting how much they can save and delaying major, expensive life decisions like having a kid.

You could make a snarky case about why millennials are borrowing more—all those $6 lattes, amirite?—but the dramatically higher cost of a college education (and, it should be mentioned, housing) is a simple explanation for more student debt.

And it’s not as though simply forgoing college in order to forgo student loans is a better option. Millennials with at least a bachelor’s degree will earn 113 percent more than what they would have with only a high-school diploma, nearly twice the 57 percent gap in the Boomer generation. In other words, college has become more essential and more expensive.

The student debt crisis has been exacerbated by the various other crises millennials have dealt with, including two once-in-a-lifetime financial crises just 13 years apart. Of course, losing your job thanks to the chicanery of subprime mortgage lenders or a devastating pandemic doesn’t make your student loans go away. Interest still accrues, which can leave you with more debt than when you started.

And then there’s housing. The median home price in 1989, the year the first Boomers turned 40, was $216,000. Today, it’s $328,000, a nearly 52 percent increase. In the same span, wages rose by just 20 percent. That’s a big problem.

“The basic way that middle American households build wealth is through their homes,” Richard Fry, a senior researcher at Pew Research Center told Bloomberg. “Millennials have been less likely to be homeowners. Fewer of them have begun the process of building home equity.”

So to recap: Going to college unlocks dramatically higher earning potential but is so expensive that it requires taking out large loans that handicap what you can do with those earnings. And if you want to buy a house, the chief way Americans build wealth, you have to pay more than 50 percent as much as Boomers did while making only 20 percent more.

If that sounds like an impossible situation for many folks, that’s because it is. And given 78-year-old Joe Biden’s repeated antipathy toward student debt cancellation, the prospects for anything changing anytime soon are slim.