However, Gen Z adults are also less likely to own a home, be married or have children.
Today’s young adults are reaching those important milestones later than their parents did in the early 1990s, according to a new report by the Pew Research Center. Pew surveyed about 1,500 adults between the ages of 18 and 34 and more than 3,000 parents of grown children. Gen Z is generally defined as those born between 1996 and 2012, including a group of teenagers and tweens.
Although today’s young adults are more likely than their parents to have a four-year college degree, work full time and have higher wages than their parents 30 years ago, they are also less likely with outstanding student loans, Pew found.
Not only is carrying education debt common, but balances are rising, the report also says, primarily as a result of rising college costs.
“They are [Gen Zers] are more highly educated but they’re taking on more debt, which makes it harder,” said Kim Parker, Pew’s director of social trends research.
Most people with student loans say they had to delay one or more important life milestones because of their debt, other studies have also shown.
“Student loan debt prevents family formation, it prevents people from making decisions about their lives, about buying a house, about buying their first car, about getting married, about have children,” Nicole Smith, chief economist at Georgetown University’s Center on Education and the Workforce, previously told CNBC.
But that’s not the whole story.
In addition to heavy student loan balances, the recent rise in inflation has caused rent and housing prices to rise.
Between home prices and mortgage rates, 2023 will be the least affordable year to buy a home in at least 11 years, according to a separate report from real estate firm Redfin.
“There are many challenges to housing costs,” said Pew’s Parker. “That’s one factor that’s holding young adults back.”
Today, 31% of Gen Z live with their parents because they can’t afford to buy or rent their own space, a separate Intuit Credit Karma report found.
Even those who live on their own still depend on their family for financial support. Only 45% of young adults, ages 18 to 34, say they are completely financially independent from their parents, according to Pew.
When I was growing up, 80 or 90% of people in my generation were better off than their parents. And those numbers have dropped dramatically.
Secretary of the Treasury Department
“When I was growing up, 80 or 90% of people in my generation were better off than their parents. And those numbers have gone down a lot,” Treasury Secretary Janet Yellen recently told ABC News.
Most Gen Zers agree that it’s harder now to make it on their own than it was for their parents when they started, multiple studies show.
Although consumers in general feel more confident about the economy than they have in years, young adults blame current conditions for the affordability problems they face – coining the term “silent depression ” to explain why financial independence is a work in progress.
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Approximately 38% of Generation Z adults and millennials believe they face more difficulty feeling financially secure than their parents at the same age, largely due to the economy, according to a report at Bankrate.
Additionally, 53% of Gen Zers say higher costs are a barrier to their financial success, a separate survey from Bank of America found.
And 73% of Gen Z respondents say the current economy makes them hesitant to make long-term financial goals, according to a recent Intuit Prosperity Index study.
Overall, the number of households with two or more generations of adults has continued to rise over the years, according to another report by the Pew Research Center. Today, 25% of young adults live in a multigenerational household, up from just 9% five decades ago.
Meanwhile, because living with mom and dad is becoming more common for young adults – it’s also more socially acceptable, according to Parker.
Parents today are more involved in their adult children’s lives, calling, texting and even keeping tabs on each other with GPS apps, Pew also found — and older kids saying they are fine with that.
“Both parents and young adults rate their relationships positively,” said Rachel Minkin, Pew research associate.
Young adults who live at home even say the arrangement is good for their relationship and financial situation and most also say they rely on their parents for advice on their jobs, finances and physical health. .
There is, in fact, an economic benefit to these living arrangements, Pew found, and Americans living in multigenerational households are less vulnerable to financial hardship.
There are emotional benefits to these living arrangements as well, Parker said. “Maybe it will stay close to their parents.”
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