NCPA - National Center for Policy Analysis

Young Americans Have a Negative Saving Rate

November 11, 2014

Young Americans have stopped saving money, reports Josh Zumbrun at the Wall Street Journal.

While Americans ages 35 to 44 have a savings rate of 3 percent, Americans between 45 and 54 have a savings rate of 6 percent and Americans 55 and older have a savings rate of 13 percent, Americans under 35 ("millennials") are saving at negative 2 percent.

While Americans overall have increased their saving since the recession, young Americans have not -- at least, not recently. In 2009, following the recession, millennials were saving at a rate of 5.2 percent. At times, they were saving at higher rates than those in the 35-to-44 category. But that trend has stopped.

Zumbrun explains how the savings problem is particularly bad, as household wealth for millennials has also fallen:

  • "Generation X" -- Americans who were under 35 in 1995 -- had wages that were 9 percent higher than under-35 wages today.
  • Those in Generation X had a net worth of $18,200, while the medial millennial's net worth is just $10,400.                                                                                                                                 
  • Today's young Americans are much less likely to have investment accounts or a variety of different investments than were those in Generation X at the same age.

Zumbrun notes two economic factors that distinguish today's millennials from those in Generation X. One is the poor job market, in which workers ages 25 to 34 have an unemployment rate above the national average of 6.2 percent, while workers ages 20 to 24 have an unemployment rate of 10.5 percent. Additionally, today's Americans under 35 carry significant student loan debt. While borrowers under the age of 35 in 1995 had a median student debt of $6,100, today's borrowers have a median student debt of $17,200.

Source: Josh Zumbrun, "Younger Generation Faces a Savings Deficit," Wall Street Journal, November 10, 2014. 

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