It’s not surprising – but it is worrisome – that young Americans aren’t saving. The generation under 35, known as millennials, have a savings rate of under 2%. They are burning through their assets and going into debt. The ramifications of this are myriad:No money to move out of parents’ house, no cushion if they want to switch jobs, no money for homeownership, not to mention no money for saving for a 401k or other retirement benefits.
But this has larger implications for our economy. “They are truly a vulnerable group. They don’t have assets to buffer themselves against shocks, and they have to manage debt,” said GWU economist Annamarie Lusardi.
Yes indeed, millennial student debt is a huge drag on these young people. In 1995 borrowers under 35 had a median student debt of $6100; now that number is almost three times that size - $17,200.
It’s no wonder that millennials don’t compare well to Generation X-ers in another category – the median millennial has a net worth of $10,400; the median Gen-Xers has $18,200 net worth, according to the Federal Reserve.
This is a sleeper issue that is going to wreak havoc on the economy in years to come. We need to support legislation like that introduced by Senator Elizabeth Warren to let millennials reduce their student debt and get them out of from under this albatross and allow them to move out from the parents, save for a house and even for retirement.