The millennial generation — approximately those born between 1981 and 1996 and thus between ages 23 and 38 this year — counts as the largest living generation in the United States, recently overtaking the baby boomers.
Millennials, who make up about a quarter of the U.S. population, have been a constant source of controversy, with alternative narratives characterizing them as everything from noncontributory to revolutionary.
New evidence on millennials and wealth accumulation, however, tells a decidedly mixed and more nuanced story than any of the extreme characterizations.
In a recent paper, written as part of the Peter G. Peterson Foundation’s 2050 Project, the Brookings Institution released an examination of the past and prospective wealth accumulation of millennials.
To date, millennials have accumulated less wealth than most prior generations at the same point in life, according to the report.
The study further noted that millennials have certain advantages over previous generations in terms of retirement saving; for instance, they are the most educated generation in history. Additionally, because of the evolution of the pension system toward defined contribution plans, they may well work longer than any previous generation, giving them additional years to save.
However, millennials also face numerous disadvantages. Their careers have gotten off to a rocky start because of the financial crisis and Great Recession. They will be employed in contingent workforce jobs with weaker retirement benefits than tradition jobs, to a greater extent than previous generations, according to the Brookings Institution.
Also, millennials are marrying, buying homes and having children later.
Because of the shift to defined contribution plans, millennials will be required to manage and navigate their own retirement plans to a larger degree than previous generations, while also likely having longer lifespans.
They will face increased burdens from any eventual resolution of the government’s long-term fiscal shortfalls in general, and the financial imbalances in Social Security and Medicare in particular, the report released earlier this month said.
District millennials face the same challenges as those nationwide, but some say there’s even more to be concerned about in the nation’s capital.
“D.C. is a wonderful city for opportunity and stability, but the problem is that it is so darn expensive and is difficult to save,” said Sean Randall, vice president of Investments and a wealth advisor at Randall Wealth Management, LP in northwest D.C.
Gordon Lambourne, vice president of communications for the National Restaurant Association Education Foundation on L Street in Northwest, said one of the biggest challenges for millennials and for Generation Z is oftentimes school.
“Students are going beyond traditional blue-collar and white-collar jobs and defining their own career paths, their way, with ‘new-collar’ jobs — positions that require specialized education and skill but not necessarily a four-year college degree,” Lambourne said.
“This generation is becoming increasingly aware of the fact that student loan debt has surpassed all other forms of household debt in the U.S., as well as the unpredictability of the job market. However, job openings in the Restaurants and Accommodations Sector are at a record high with 991,000 unfilled jobs lying in wait,” he said.
Lambourne said there’s so much pressure on students to attend a traditional secondary education that the importance of vocational education is lost.
Still, many others say the District presents millennials with mostly unaffordable housing options.
“Most millennials who have just started working cannot afford to buy a home in D.C., where the median property price amounts to $680,400 in March 2019, according to data from Mashvisor, a real estate data analytics company,” said Daniela Andreevska, who works to help investors find lucrative traditional and Airbnb rental properties. “Rental rates are also high with an average level of $2,620 in March 2019. The main reason for these high rates is the demand for housing in Washington, which puts millennials there at a disadvantage.”
Robin Lee Allen, managing partner for Esperance PE, identified one other challenge for District millennials.
“The biggest problem I have seen is an over-reliance on technology in networking,” Allen said. “In the beltway, there is no substitute for repeated face-to-face contact. Power flows through networks. Networks are maintained through durable connections. At the very least pick up the phone and make a voice call.”