$1,005,000,000,000. Seeing it written out like that is jolting. Adults 19-29 have amassed over $1 trillion worth of debt, and the biggest contender is student loan debt: $378,900,000,000 (Bloomberg). According to Bloomberg, student loan debt has grown 102% since 2009, whereas mortgage debt has only grown 3.2%. Millennials who are stacked with debt are actually deferring life milestones. One of those being buying a house. They are renting longer than previous generations. Mortgage debt for this cohort is only a little less than the student loan debt at $362.9 billion (Bloomberg).
This picture is pretty bleak. According to Fortune, 1 in 5 millennials believe that they will die still in debt; this includes the upper swing of the generation looking at those aged 18-37. Furthermore, this age group is earning less than the same group did in 1980.
Millennials have a bad rap; they are viewed as entitled and lazy. Yet, this generation is actually quite conservative, something that will ultimately benefit them in the future. While millennials value travel more than previous generations and steadfastly pursue work-life balance, they actually have more retirement savings than Generation X. This is due to their propensity to put money in savings accounts when they can, pursue higher education, and their alternate view of assets (MarketWatch).
While this age group is swamped in debt (something many businesses are now moving towards helping them with), things may not be all bad. If we look deeper into millennial values, we see they view assets differently than older generations. They emphasize post-secondary education and continuing this education further, and they prefer to acquire experiences and savings to material things or tangible assets. While now it seems there is no light at the end of the tunnel for millennials, it is quite possible they will catch up in another few years due to their conservative nature concerning assets.
Even though millennials theoretically have few tangible assets, they still need to protect the intangible ones. Estate planning can help this conservative age group ensure their hard work is protected as well as the people they may unexpectedly leave behind.
Millennials will want to consider taking out a life insurance policy to protect their significant other if they were to die unexpectedly, especially if they share financial obligations. Establishing a durable power of attorney and health care proxy will make sure wishes are carried out in the event of incapacitation, and naming a trust as the beneficiary of all your intangible assets will make sure loved ones will not have to go through probate court. Remember the note that millennials have more in retirement savings than Gen X? Well, putting money into a retirement account is not all that goes into planning for retirement – another key piece in creating your estate plan.
While it may feel like one more thing on your plate, if you are a millennial, taking care of estate planning now will greatly benefit you in the future. While all the debt is daunting and weighing on your mind, guarding against the unknown can help you have some peace as you tackle paying it down.
Bloomberg, February 25, 2019, “Millennials Are Facing $1 Trillion in Debt”
Fortune, January 9, 2019, “20% of Millennials In Debt Believe They'll Die Without Paying It Back”
MarketWatch, Mar 26, 2019, “Despite millennials’ record $1 trillion of debt, they may be better off than Gen X”