In my first Sixty & Me blog about helping adult children financially, I noted that today, adult children of the Baby Boom generation live in a different financial reality. In this blog, I’ll cover specific issues, such as housing, student loan debt, and other challenges they face in their quest for financial independence.
Housing Hurdles
Many Baby Boomers achieved the goal of home ownership in their young adult years. Their offspring have not been so fortunate. A 2021 CNBC analysis showed a troubling gap between the average income of $144,192 needed to afford a home and the actual median income of $69,178.
This gap results in younger generations being less likely to be able to afford a home. According to Apartment List’s 2023 Millennial Homeownership Report, Millennials (adults aged 28-44) lag behind previous generations in homeownership by age 30.
| Generation | Homeownership by Age 30 |
| Millennials (1979-1995) | 42% |
| Gen X (1964-1978) | 48% |
| Baby Boomers (1946-1963) | 51% |
| Silent Generation (1925-1945) | 60% |
This trend is confirmed by the fact that today’s homebuyer is, on average, 44 years old, compared to 25-34 in 1981.
The report also showed that younger generations are losing confidence in their prospects for owning a home. Of Millennials studied in 2018, 13% said they would probably be renters forever. By 2022, this figure climbed to 25%.
Even as renters, their budgets are under stress. Since 1980, average monthly rents increased 8.85% per year even though inflation over the same was 3.09% on average.
Luckily, many Boomer parents are helping by contributing via gift or loan for a downpayment for a house purchase because the young would-be homeowners are often weighed down with student loans and credit card debt. A full 22% of home buyers ages 24-32 depended on such help from a friend or family member.
Student Loan Burden
The cost of post-secondary education has soared over the past several decades. The National Center for Education Statistics (NCES) reported that average annual undergraduate college costs jumped from 1963 ($1,248) to 2020 ($27,673). When federally guaranteed student loans were rolled out in 1965, students (Boomers) often could cover higher education costs through employment earnings, help from their families, scholarships, etc. Their children were not as lucky as it is rare to find anyone today “working their way through college.”
Instead, students often borrow to cover college costs. This has driven student loan indebtedness to $1.74 trillion, with an average monthly payment of $503, which the typical borrower will pay for 20 years.
Substantial student debt has impacted borrowers’ long-term financial stability and wealth-building ability. As author Anya Kamenetz (Generation Debt, 2006) states, these borrowers are “waiting longer to get married and have children, making people less likely to own a home, start a business or leave their hometowns.”
Credit Card and Other Debt
Many Americans, not just students, have a love/hate relationship with debt of all forms, especially credit cards. According to the Federal Reserve, in Q3, 2024, credit card debt stood at $1.166 trillion.
It’s more than just credit cards. Averages for the other major non-mortgage debt categories show households of all ages carry a significant amount of debt.
Average nonmortgage debt balances by generation
| Debt type (balances) | Gen Z | Millennials | Gen X | Boomers | |
| Auto | $9,894 | $14,836 | $16,836 | $10,611 | |
| Credit card | $2,789 | $6,408 | $8,917 | $7,564 | |
| Student loan | $7,067 | $15,014 | $12,680 | $5,083 | |
| Personal loan | $1,915 | $5,299 | $7,348 | $5,050 | |
| Total | $21,665 | $41,557 | $45,781 | $28,308 | |
As might be expected, Gen X and Millennials carry the most significant load since they are most likely to have responsibilities like helping to pay children’s college costs as well as caring for aging parents. Gen Z (1996-2012) has less debt simply because they have not had time to accumulate it. Overall, the effect is that the need to pay off debt impedes efforts to build wealth.
Childcare Load
Today, adult children with their own children endure significant cost challenges. The Economic Policy Institute reported in 2020 that U.S. households with children spend between 19% to 29% of their income on child care, depending on location, number of children, and type of care.
Young workers depend on stable employment as one of the main ways to build wealth. Yet, a 2022 study by the bipartisan Council for a Strong America found that expensive and difficult-to-find childcare options were negatively impacting young working parents in terms of:
- Less time at work
- Lower effort and productivity at work
- Work disruptions
- Diminished career pathways
Retirement Savings Obstacles
Recent inflation woes have exacerbated an already troubling trend among post-Boomer generations struggling to save for retirement. The Goldman Sachs Retirement Survey & Insights Report 2022 showed that post-Boomer generations perceive significantly more hurdles to saving for retirement.
What Affected Your Ability to Save for Retirement?
| Impacted Savings Ability | Boomers (1946-1963) | Gen X (1964-1978) | Millennials (1979-1995) | Gen Z (1996-2012) |
| Too many monthly expenses | 56% | 72% | 84% | 82% |
| Caring for or financially supporting family members | 38% | 63% | 79% | 75% |
| Paying down existing loans, including student loans | 36% | 59% | 76% | 75% |
| Time out of the workforce for child or elder care | 31% | 55% | 72% | 75% |
| Credit card debt | 40% | 55% | 71% | 58% |
| Saving for college | 14% | 43% | 67% | 63% |
| Other financial hardships | 51% | 67% | 76% | 79% |
Despite these challenges, many members of the post-Boomer generations are saving for retirement. One encouraging fact is that younger people are starting to save for retirement earlier in their careers. However, given the median amount saved so far, many members of all three generations have a long way to go before accumulating meaningful savings to fund a comfortable retirement, including around 10% of each generation with no retirement savings.
| Generation | Age Started Saving* (Median) | Estimated Median (including $0) | No Retirement Savings |
| Gen X (1964-1978) | 30 | $82K | 11% |
| Millennials (1979-1995) | 25 | $49K | 10% |
| Gen Z (1996-2012) | 19 | $29K | 9% |
* Workers who are saving for retirement through an employer-sponsored retirement plan and/or outside of work.
Can Boomers Make a Difference?
Post-Boomer generations face significant financial headwinds. Boomer parents fortunate enough to have financial flexibility may be able to offer some welcome help. Nevertheless, parents need to honestly assess if they have such flexibility. In the next blog in this series, I’ll cover the questions parents need to answer before throwing out a financial lifeline to their adult children.
Let’s Have a Conversation:
What financial help have you provided to your adult children? Do you think post-Boomer generations are worse off financially? What expenses take the biggest toll on your adult children’s finances?
