The other day, a friend of mine pointed out that I should have opened up a Roth IRA years ago—“I’ve had one since I was 16,” he shrieked. If a recent study is to be believed, he may be an outlier in our generation. In the New York Times, Annie Lowrey examines a study from the Urban Institute, which shows how young Americans are making, spending, and saving less than the generations that came before.
It’s not a huge surprise: The recession deeply affected 20-somethings who were in or just out of college. But seen in the grand scheme of things, Lowrey explains, the economic climate—even if it continues to improve—will echo through a certain subset of young adults:
These troubles, many economists fear, left serious scars, and not just psychic ones. Now that the economy has entered a steady but slow recovery, younger millennials wonder if they can make up that gap… Thirty or 40 years from now, young millennials might face shakier retirements than their. For the first time in modern memory, a whole generation might not prove wealthier than the one that preceded it.
The millennials’ relationship with money seems quite simple. They do not have a lot of it, and what they do have, they seem reluctant to spend. Millennials are buying fewer cars and houses, and despite their immersion in consumer culture, particularly electronics, they are not really spending beyond their limited means. Their credit-card debt has declined, most likely because many millennials cannot get a credit card, and in part because they know they cannot afford to spend now and pay back later. 'They have this risk aversion that we’ve seen with millennials since they were teenagers,' Howe said. 'It’s declining alcohol use, declining drug use. I mean, declining sex.'
According to some economists, we are the downward slope of a bell curve that began with our grandparents and peaked with our parents. “Millennials are the best-educated generation ever,” writes Lowrey. “Their challenge may just be to preserve that advantage for their own children.”
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