How the Much-Maligned Millennials May Be Helping Your Bottom Line

Millennials are often portrayed in the press as a bunch of under-employed, tech-obsessed, living-in-their-parents’-basement drags on our economy.  But, demographic data paints a different picture.  Millennials, or Generation Y (defined as those born in 1981 through 1997), now represent the largest living generation in the U.S., outstripping both Generation X and Baby Boomers as of 2016, and they may be positively impacting your bottom line in a number of ways.

Funding Social Security.  Are you collecting Social Security retirement benefits?  Thank a millennial.  Payroll taxes account for over 86% of annual revenue for the Social Security system, and in 2015, the millennials became the largest generation in the U.S. labor force with over 53 million workers.  They are not yet the highest income-earning generation, but that will change over the coming decades, especially given their relatively high education levels and technological savvy.  Thus, if/when Social Security trust funds are depleted and your benefits are completely dependent on income from payroll taxes, you are even more likely to have a millennial to thank for your monthly benefit check.

Boosting Housing Prices.  A recent Wall Street Journal article reported that home prices through January of this year were rising at the fastest rate since 2014, and that one of the drivers of these gains was the increased demand from millennials entering the housing market.  According to the National Association of Realtors, many millennials have saved enough for a down payment to buy more than just a condo or starter home, and therefore they are influencing the market for “move-up properties” as well.  (Maybe living in mom and dad’s basement for a few years was not such a bad idea after all!)  This trend of rising home prices may cause difficulty for aspiring first-time home buyers, but it is likely to benefit older generations, especially retired persons who may be looking to downsize their homes.

Bolstering the Economy.  There are many ways to measure how the economy is moving and many factors that impact that movement.  But, as any Economics 101 student could tell you, one way to measure economic growth is by changes to gross domestic product (GDP), and two of the main components of GDP are the amount of goods and services consumed and the amount invested nationwide.  Here again, millennials are poised to make a significant contribution in the coming decades.  Just as their demand for housing is starting to increase, their demand for other consumer goods and services will likewise grow over the coming decades as younger millennials enter the workforce and older millennials continue to advance in their careers.  Similarly, having experienced the Great Recession at a formative age, older millennials in particular are focused on saving and investing for retirement.  According to a 2014 Wells Fargo study, 8 in 10 millennials indicate that the recession convinced them of the need to save more now, more than half are saving regularly, and, despite witnessing the stock market declines of the recession), millennials remain open to investing in stocks.

Despite facing a difficult post-recession job market as they entered the workforce and being saddled with the largest student loan burdens of any generation, millennials are finding employment, buying homes, and increasing consumption and investment–all of which has the potential to benefit the financial situation of older generations.  We have witnessed these positive trends in interacting with young adult children of our clients–millennials who are focused on savings, home buying, etc.–and we expect these trends to only grow stronger over the coming decades.