I’m a millennial myself so I feel like I’m qualified to discuss this subject (and with a financial independence twist of course). I do a horrendous job of not following the news. I always catch myself on the websites of numerous online business news companies seeing what is going on. Many bloggers have written about how horrible following the media is on a day to day basis, and I totally agree, but it doesn’t mean I do a good job of blocking it out. The sad reality is that doom and gloom headlines equal clicks and views.
Lately, and I think this is partially due to it being election season, the hot topic has been Millennials. Every channel you flip to or online news article you read is how bad Millennials have it. They live at home with their parents. They are drowning in debt. They are the first generation in the U.S. worse off than their parents. They can’t afford a home. They can’t find their dream job. They are working at Starbucks. The list goes on and on.
Now are some Millennials having a tough go at it? Of course they are, I’m sure of it. But Millennials as a whole? I don’t think so.
Let’s start with education. I graduated undergrad with about $30k of student loans. Was this more than my parents had? Yes, but that’s because they didn’t go to college! College wasn’t a “given” for our parents. Statistically speaking less than 50% of high school graduates headed off to college in 1975 (due to a variety of reasons such as war), whereas this number is about 65% today. When I was in high school I had a course to college mapped out for my by my teachers and counselor. Take these AP classes. Play a sport. Get involved in an extracurricular activity. I followed their lead and next thing you know, I was off to my school of choice with a partial scholarship.
Investing and Retirement
Our pal Jack Bogle didn’t create the index fund until 1976. If our parents wanted to invest some dough in equities, they had to do it through a broker and pick stocks, or buy expensive mutual funds with load fees and commissions. Now we have extremely cheap (or free) online brokerage accounts. I set up my Vanguard account in minutes and with a click of a button I can invest money whenever I want.
The 401k was created in about 1981 when some random guy noticed a loop-hole in the Internal Revenue Code. Before that it was much harder for workers to shield earnings from income taxes. Now you might be saying “well my parents have a pension!” Pensions are great if you have them but they are also handcuffs tying you to your employer. People notice that our parents spend decades with the same employer, that’s because people are taught to be slaves to their pensions since this will help them through their golden years. When in reality in most cases, you would of been better off socking money away in a 401k and IRA and retiring on your own terms.
30 year mortgage interest rates were above 10% from late 1978 to until almost 1991! Today you can get a 30 year fixed for about 3.75%. Maybe these low interest rates are inflating home values, but could you image taking out a mortgage at 12%?!? Also this community has also blogged about how owning a home is becoming less of the “American Dream.” Us millennials are okay with renting, and would rather spend money on travel and experiences instead. I may be an outlier but if I never own a home, I would be A.O.K. with that.
Unemployment currently sits below 5% which is below historical averages. The internet allows us to search for jobs all over the country and globe at the click of a button. Our parents relied on the classifieds and maybe a trade magazine when job searching (well they never really did this because they are tied to their pensions), and we can see open jobs in our field in Seattle, Boston, or Richmond instantly and submit our resume with a click. For those who are employed, inflation adjusted gas prices are below the historical average, easing the burden of commuting.
Health and Technology
This doesn’t even need an explanation. We have the internet, our parents didn’t, and the medical breakthroughs that have happened in the past 30 years have us living way longer than our parents and grandparents. Certain diseases which were death sentences 40 years ago, are easily curable today. I’m going to have to agree with our friend Warren Buffett who recently said “The babies being born in America today are the luckiest crop in history.” I don’t believe we have it bad at all!
Do you have it worse off than your parents? Is being a millennial the pits?