There's no doubt that baby boomers and millennials have different preferences when it comes to lifestyle choices. But what was once possible 30 or 40 years ago during baby boomers' younger days isn't quite the same for millennials today. Times have changed, and it's not necessarily for the best.
The area where the differences are most apparent are found in the way that each generation has the capability to plan out their future. Whereas most baby boomers can recall a time where they were around the same age as their kids today but were already married, owned a house and had a few kids, millennials are trailing in most of these categories. Most millennials are waiting well into their 30s to take the next step financially in regards to home buying, marriage and children.
What's causing millennials to move at a much slower pace than that of their parents’ generation?
Baby boomers found themselves lucky in that most were born about 20 years after the Great Depression, which gave the country some time to recover. Government assistance programs like Social Security were put in place for their parents to help dig out of what could have been a bad scenario. While Social Security is still in play today, there's no telling for how much longer or if it will run out when millennials decide to retire in 40–50 years.
An astounding 75 million millennials came into their adult years during the time of the biggest recession since the 1929 crash. It appears that, while baby boomers thrived off of a good economy and newly founded government assistance, millennials found themselves struggling just to get by.
At the same age as their parents were when they entered the workforce, millennials today are earning approximately 20 percent less. This gap in financial earnings puts millennials and baby boomers at the opposite sides of the spectrum. It is resulting in this generation owning fewer homes and cars, as well as having less in their savings for the future.
Research shows that, following the 2008 recession, 29 percent of baby boomers were helping their children pay rent and/or mortgages. The cost of living has increased significantly, and millennials don't have the means to support themselves.
As such, this financial discrepancy in lifestyles due to the time each age group was born has helped the gap between these two generations to grow. Research shows those over the age of 65 are 47 times more wealthy than those under the age of 35 years old.
Another factor underpinning millennials' financial success is the amount of debt they're saddled with following graduation from their university. Due to the outstanding cost of attending college today, universities like NYU are creating programs that will help students graduate at a faster rate. However wonderful the expedited degree process may be, it doesn't help significantly reduce the tuition amount. With NYU costing $66,000 a year to attend today, it cost baby boomers approximately $1,800 for tuition and fees in the 1960s.
With the combination of extreme student loan debt and earnings equaling 20 percent less than that of their parents’ generation, it's no wonder there's a significant financial and lifestyle achievement gap. When entering the workforce that's already paying them less money, millennials are crippled with an overwhelming amount of debt to start paying right out the gate. This impacts the ability to earn more and save more for the remainder of their adult lives.
What's the solution to closing the financial gap between baby boomers and millennials?
Now that today's society has had time to recover following the 2008 recession, the root answer may lay in the high costs of college tuition. If the amount of student debt was decreased significantly due to a much lower tuition rate, the lower wages being paid to millennials would not have as much of an impact. This would allow them to start saving for homes and retirement at a much earlier age.