Why Older Millennials Harbor the Most Debt
Millennials take on a very special place in the existing eras. With Gen-X and the Baby Boomer age reaching the age of stability, most of their debt is stable and wrapped up in large purchases. In general, those who are over the age of 35 most likely have a car or house (or both) that they are paying off. The most common debts of millennials aged 25-34 deal mostly in credit card debt and student loans. These make up thousands of dollars of debt that many millennials will end up keeping with them for years on end.
According to a Northwestern Mutual study conducted in 2018, older millennials have $42,000 in debt. The majority of the debt is in credit cards, 25% of the total. 16% of the total debt is in student loans. The average individual reaches their earning potential around 44, so millennials will have a bit of time to begin to garner positive financial growth.
The main reason that Millennials have so much debt (and have more debt than other generations) boils down to the period of time they come from and what they’ve been exposed to. The major financial happening for this generation would be the Great Recession of 07-08. However, it would stand to reason that most of the Millennial age didn’t feel the full brunt of the recession as the age range would still be in school (university or grade school). The multitude of ways that one can accumulate debt far outnumber the other methods that existed for older generations. There are more ways to spend money for a Millennial to access without even leaving their home. Without a mortgage or a car payment to worry about, the recession came and went without much fanfare.
It would seem like the deck is stacked against Millennials and their financial endeavors. However, Millennials have an abundance of time to pay off these debts, especially when you consider the Northwestern Mutual finding that 38% of Americans expect to be working well after the retirement age of 65.