Research Publication Wealth and the Credit Health of Young Millennials
Signe-Mary McKernan, Caroline Ratcliffe, Trina Williams Shanks
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As millennials age and become a higher percentage of the workforce, their overall financial health is increasingly consequential for the economy as a whole. With expectations that they will be less well off financially than their parents, millennials are feeling financially insecure.

Concerns about this generation’s economic future raise questions about their current financial security. What is their current wealth position? Are they on track to be financially secure as they age, and how does this trajectory compare with previous generations? Are there natural points of intervention that could improve their circumstances?

To address these questions, we examine the collective balance sheet of millennials and dig deeper into their financial health as tracked by private-sector credit agencies. This chapter—in the book The Emerging Millennial Wealth Gapdescribes the wealth and credit health of young millennials, as reflected in recent data from the Survey of Consumer Finances and a major credit bureau.

Key takeaways

  1. Millennials’ family wealth is stagnating as millennial families are barely breaking even with families the same age three decades earlier. Young millennial families (ages 20–29) in 2016 had 31 percent more wealth than young families the same age in 1983, and older millennial families have only 2 percent more. Baby boomers and the silent generation families, by comparison, have far more wealth (114 percent to 195 percent more) on average than families at their age roughly three decades earlier.
  2. When considering the full range of debts incurred, several categories of debt dominate the young millennial balance sheet, including student loans (38 percent), car loans (21 percent), and mortgage loans (21 percent).
  3. The share of millennials with a subprime credit score increases with age, most dramatically for young millennials living in communities of color. Among people in majority-white communities who have a credit bureau record, 26 percent of 18- to 20-year-olds and 34 percent of 25- to 29-year-olds have a subprime credit score—a difference of 8 percentage points. Among people in communities of color, the shares of people with subprime scores are significantly higher at 34 percent and 48 percent, respectively—a difference of 14 percentage points.
    1. Importantly, nearly half of millennials ages 21 to 29 with a credit record who live in a community of color have a subprime credit score. This is consistent with what we know about the large racial wealth gap in the US and structural racism.
  4. A greater share of young millennials in the South have debt in collections, consistent with general patterns of lower incomes and greater financial distress in the South.
  5. Millennials are struggling with both medical debt and student loan debt. Among student loan holders ages 25 to 29, one in five (20 percent) has student loan debt in collections.

Young millennials’ wealth and credit health show that this generation is on a very different trajectory for wealth building than their parents’ generation. Lower wealth, rising student loan debt, and poor credit health make starting out more economically precarious. A stronger foundation for economic security for all could make life better for young millennials, future generations, and the country as a whole.

Research Areas Wealth and financial well-being Children and youth Race and equity
Tags Asset and debts Racial and ethnic disparities Economic well-being Opportunity and ownership Family credit and debt
Policy Centers Center on Labor, Human Services, and Population