Industry News

Recently, the Center for Retirement Research (CRR) at Boston College released its issue brief, Is the Retirement Picture for Millennials Looking Better? CRR studied the effects of the global pandemic and economic disruption since 2019 on the retirement preparedness of Millennials (those born during 1981-1999).

In addition, the issue brief indicated that several factors were significantly higher than in 2019 including the unprecedented governmental fiscal support; strong employment rate; significantly increasing home values; and stock market increases (despite the significant drop in 2022).

The key findings include:

• Initially, Millennials embarked on their work careers in very weak labor markets and, therefore, lagged behind Late Boomers and Gen Xers at the same ages in wealth and life events.
• However, a significant change was revealed in 2022 that Millennials absorbed most factors and actually surpassed earlier cohorts in wealth growth.
• This was mainly due to a substantial increase in housing wealth which excelled during COVID and financial wealth gains which also helped to improve balance sheets.
• The effect on retirement security for Millennials is yet to be determined since housing prices may reverse and typically retirees do not use their home equity for covering their consumption during retirement.

The brief concludes, “Millennials now have more net wealth relative to income in their 30s than Gen Xers and Late Boomers had, despite still having more student debt. Most of the improvement in their balance sheets is due to the rapid increase in housing prices during the pandemic. They also have higher non-housing wealth as well, thanks to increased saving and being positioned to profit from a strong stock market.”

It adds, “Despite all the improvements, the good fortune of the Millennials relies primarily on housing. The house is an illiquid asset, and few people take advantage of their home equity to support their consumption in retirement. Hence, it is not clear the extent to which housing equity should be counted as retirement saving.”

The issue brief is available here.