Finance

Millennials Actually Have Way Less Debt Than Baby Boomers In Every Category Except Student Loans

Maybe it’s actually the Baby Boomers who should be cutting the avocado toast out of their budgets.

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We did it, Millennials! We finally passed $1 trillion in collective debt!

At least that was the gist of the headline on a new Bloomberg article that was based on numbers from the New York Federal Reserve Consumer Credit Panel. Having actually read the contents of the article, and looked at some very nice charts, I suspect the exact wording of the headline has something to do with the searchability of the word “Millennials” and the shareability of any headline that seems to impugn the money management skills of my generation.

Really, the headline should have read something more like “Young Millennials Are Incurring Far Less Debt Than Any Other Age Demographic, But They’re Getting Hosed On Student Loans.”

The newly released debt figures are not actually grouped by generational catchphrases, but by age range. The $1 trillion figure in fact refers to the collective debt owed by those who are 18-29 years of age, the very youngest Millennials out there. And young people reaching $1 trillion in collective debt is not at all unprecedented. The 18-29 age group had previously surpassed $1 trillion in debt in late 2007, when I was in that demographic myself.

The $1 trillion debt figure for young Millennials becomes really unimpressive when you look at the total debt loads carried by other age groups. We senior Millennials and our tail end Gen X friends, ages 30-39, have $2.858 trillion in total debt. The mid-range Gen Xers in their 40s are doing worst of all, at $3.426 trillion in total debt. The aging Gen Xers and the youngest Baby Boomers (those in their 50s), carry a $3.155 trillion debt load. The full-on Baby Boomers, ages 60-69, have more than twice as much debt as young Millennials, at more than $2 trillion. And whatever you want to call the 70-plus crowd, they collectively owe just a smidge more than the young Millennials, at $1.044 trillion. Keep in mind that these people have already burned through half a century of prime earning years.

Despite all the headlines bemoaning the dire financial straits of Millennials, those numbers look to me like this generation is actually doing a pretty damn good job of eschewing pointless and expensive debt. The difference is even more stark when you break it down by the different types of debt.

Comparing young Millennials (the 18-29 age group) with the Baby Boomers in their 60s, it’s perhaps not totally surprising that the former carry way less mortgage and home equity revolving debt than the latter. Younger people are generally waiting longer to buy a first home, and they don’t have as much home equity to borrow against so as to put in new backsplash and shower tiling and other bullshit like that. It’s maybe not even that surprising that people in their teens and 20s carry less auto loan debt than people in their 60s — perhaps in one’s 60s it is no longer socially acceptable to drive a vehicle held together by duct tape. But what excuse do Baby Boomers have for their credit card debt? Comparing these two age groups, the Boomers have nearly three times the amount of credit card debt carried by the young Millennials — $156.2 billion versus just $58.6 billion. The Boomers in their 60s also have more than twice as much debt as the young Millennials in the ill-defined “other” debt category ($73.3 billion and $30.2 billion, respectively).

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The only debt category in which the young Millennials are swamped compared to the Baby Boomers is student loan debt. The young Millennials collectively owe $378.9 billion on their student loans, compared to $77.7 billion still owed for student debt by the 60-69 crowd. Neither of these are the age group with the worst student debt load. That honor goes to the senior Millennials and the young Gen Xers: people in their 30s are in the hole a whopping $476.1 billion because of student loans. The fact that the cost of higher education has more than quadrupled in the last 30 years, even when accounting for inflation, probably has a lot to do with that.

Overall, it’s a pretty good debt report card for Millennials compared to other age groups. All the other age groups have had way more time to pay down debt and to learn how to live without it, but apparently did neither. With more than twice as much debt compared to their young Millennial counterparts, and a lot less time remaining to pay it down, maybe it’s actually the Baby Boomers who should be cutting the avocado toast out of their budgets.

Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at [email protected].

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