A number of years ago, Bill Sharpe (noted economist), Laura Carstensen (noted psychologist), and I (good listener and note-taker) were having a conversation about news headlines on emerging trends indicating that Millennials were delaying “everything.” The narrative was that this generation were “disruptors” and wanted to do everything differently; wanted more work/life balance, wanted more meaningful work, were creating a sharing economy, and having had a front-row seat to the financial meltdown, they saw the risks of owning a home and the struggle of supporting a family, and didn’t want either. Therefore, they were going to do it their own way.
“Would this generation be ready?”
Bill, looking at it through the eyes of an economist, wondered about the financial implications. With increased personal responsibility for preparing for retirement, would this generation be ready to retire when they wanted to? Laura, with the psychologist view, wondered whether they were delaying those life events because they wanted to, or because they had to. Were they permanently changing the life event landscape or simply just doing things later? And all of us wondered, “Are they that different from every other generation?” Addressing these questions became more urgent when we saw one of the major findings from our 2016 Sightlines Report: young people today are in a more precarious financial position than previous generations at their age, but were the “delaying everything” headlines true, and did that mean the younger generation was going to face a rocky road to financial security?
The “Milestones Project” examines when certain life events that have significant long-term financial implications are achieved; getting a job, saving for retirement, getting married, having children, and buying a home. The project also examines when people thought was the “ideal” age to experience those milestones – and then compares how the timing of those milestones has shifted generation to generation, starting with the Silent Generation.
What we found confirmed our assumptions but also presented many surprises. While we were not surprised to find that for the most part, Millennials are experiencing these milestones at later ages than previous generations, we were surprised that each generation since the Silent Generation has experienced delays; Boomers attained these milestones later than the prior generation, and Gen-X’rs later than the Boomers. And while we thought that the Millennials were challenging the “ideal” and wanted to experience these milestones at later ages, our study, using a nationally representative sample, showed that they share the same vision of the “American Dream” as their parents, grandparents, and even their great-grandparents, despite significant changes in lifespan and social norms.
As is often the case in studies like these, the topline data may hide a more nuanced story. For example, we do see some differences in the “ideal” when looking at people across gender, race, and education, so we are not ready to rule out the “disruptor” role that the Millennial generation might play. Further work should take a more segmented view of the attitudes and behaviors of an entire age cohort. The view of the future from the vantage point of a millennial living in high-cost San Francisco, and working in the tech industry, which defines success by how disruptive it is, may be very different from a millennial living in a more housing friendly, traditional industry part of the country. The environments they live in, undoubtedly help shape their vision of what is optimal versus what is possible.
“We thought that the Millennials were challenging the ‘ideal’…[but] they share the same vision of the ‘American Dream.'”
So, back to the questions from the original conversation … will they be ready for retirement? We won’t know until they get there, but there are positive indications that they’re paying attention. This study indicates millennials are beginning to save for retirement earlier than other generational cohorts, but they also face other kinds of financial challenges that may delay other important financial milestones, like purchasing a home. Are they delaying because they want to or because they have to? While this study did not specifically ask subjects whether these delays are due to financial constraints, the disparity between ideal and actual home buying provides some sense that the delays are not something, on average, that they want. And, they don’t appear to be that different from other generations who all did things “their own way”.