Many Millennials will be the first American generation to have a lower standard of living compared to their parents

Many Millennials will be the first American generation to have a lower standard of living compared to their parents
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By Jack Kelly

Many Millennials will be the first American generation to have a lower standard of living compared to their parents.

A toxic mix of a tight housing supply, which makes home prices exorbitant, coupled with high real estate taxes, makes it extremely difficult to purchase a home. In my neighborhood, the average price for a house is roughly $750k to $1 million. It will be impossible for my kids to buy  here 5 to 10 years out of college.

College debt is an anchor weighing down young adults—and drowning some. Carrying a burden of hundreds of thousands of dollars in debt works out to a large bill to pay each and every month. The money spent on repaying loans decreases the amount of money available to save, invest in the stock market, start a business or buy a home.

When the Millennials—and the Gen-Zers will follow this path too—rent an apartment, they will incur large monthly costs. The upfront security deposit, first month’s rent and application fees are all asked for in advance. Add in the expenses of a phone, insurance, car payments, clothes, food, cable tv and other necessities (and some small luxuries) and you’re hemorrhaging money.  Using credit to carry you through becomes yet another high-interest-bearing liability.

Since a large majority of kids go to college, the value of the degree, specifically in certain majors, has been diluted. The vast amount of liberal arts graduates, who don’t possess the requisite skills for specialized well-paying jobs, find themselves underemployed or unemployed. They’re either pushed into the gig-economy, serve as a barista at Starbucks or go for a graduate degree—creating even more debt.

A lot of this is not their fault. In what world does it make sense for a 17 or 18-year old to sign a contract binding them to $200k in loans with high interest rates? At that age, they are not allowed to legally drink or smoke, but they can sign their financial lives away.

Of course, there are those who major in STEM-related subjects, such as technology and engineering, and are highly sought after and realize sizable salaries right out of college.

Ironically, the younger generations may be in for a windfall in the future. As their baby boomer parents pass away, they stand to receive a large inheritance. It could be the largest wealth transfer in American history. 

The problem could be if the market gets rocked and they sell their stock at fire-sale prices. Also, if all the boomers start selling their homes to downsize their lifestyles, housing prices may collapse. This will hurt the money being transferred over to their kids, but may make housing prices less expensive.

It’s not surprising that Bernie Sanders is surging in the polls and the idea of socialism is gaining traction amongst young people. They look at the fact that their lives won’t be as good as their parents and they feel that they’ve been lied to. Due to crushing debt and low wages, younger people may forsake marrying, having children or buying a home—all the hallmarks of the American dream—since it’s seems financially unattainable. 

For many, they were not taught the ravages of socialism and communism in China, Russia and Venezuela. To them, they feel that there is little to lose and they might as well take a chance on changing things up since their futures don’t look too rosy.

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