Published on July 19
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Balancing Act

Why millennials are taking their time reaching financial milestones

The phenomenon known as “failure to launch” refers to a stereotype of millennials who are permanently ensconced with their parents, or too self-involved or unfocused to commit to a spouse, home or employer. This perception leads the older generation to worry that millennials are putting financial security out of reach.

The stereotype is borne out, in part, by statistics: young Americans are marrying, having children and buying homes later than their parents did. They’re also changing jobs more frequently, according to 2016 research from Gallup. Yet these choices may be driven as much by necessity as by choice. And they may also reflect a reasonable, even laudable, attempt to balance happiness in the present with financial stability in the future.

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Pay more to earn more

While millennials understand the long-run income advantage of a college education, they also know the degree often comes with crushing debt. More than two-thirds of bachelor’s degree recipients in 2015 graduated with student loan debt, while two decades ago that figure was less than half. And the average bill today is a whopping $35,000, according to Edvisors. 

Jared Friedberg, 31, accumulated twice that amount of debt to obtain his degree at Emory University. To pursue his calling in public health, he later borrowed more to get a master’s degree and accumulated credit card debt to pay his expenses while in school. The credentials helped him get hired and promoted at the Centers for Disease Control and Prevention in Atlanta, but “the debt has had a ripple effect,” Freidberg said. “It’s slowed down our ability to get a house and start a family.”

Friedberg is not alone: 56 percent of millennials say they’ve delayed a life event because of debt, versus 43 percent of older adults, according to a survey by Bankrate. Beside the burden of student loans, young people in a consumer-oriented society easily accumulate credit card, auto loan and mortgage debt.

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Not living their parents’ lives

Millennials who graduated during the Great Recession had an unusually hard time launching careers and paying down debt. With the recovery more fully underway, many millennials nonetheless are making a conscious choice to delay traditional life milestones such as homeownership and starting a family—or even to pass them up altogether.

“Previous generations lived in a very linear fashion: Graduate, get a job, get married, have kids, buy a home, retire,” said Eric Roberge, a certified financial planner based in Boston. “Millennials don’t want their parents’ life; they want to know how to live today.”

Some millennials buck their parents’ expectations by refusing to commit to jobs that don’t satisfy them, or by delaying homeownership. Some leave the workforce entirely to cross out the “bucket list” items their parents envisioned for retirement.

Emma Steinmetz and Andrew Langerich, both 28-year-old physical therapists, have more than $150,000 in student debt between them. But the Fairfax, Va. couple is still planning a six-month hike along the Appalachian Trail, seizing the moment after Langerich’s family recently experienced loss of some loved ones.“We don’t want to have regrets,” Steinmetz said. “We want to say we had this adventure, we grew as people and as a couple, and we experienced life.”

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Keep one eye ahead

Millennials tend to hop between jobs and cities. Financial advisors who work with them say they’re trying to balance a desire for flexibility with moves that could enhance their financial security, like paying down debt, saving for retirement or buying insurance.

“Financial planning for millennials is really about weaving a strong rope that will support them regardless of their path,” said Cady North, a financial advisor based in Washington, D.C.

For example, North said, millennials can think about retirement early—before job and financial security set in—and begin to set goals, even if their target or timeline ends up changing. This approach of taking small, consistent steps helps them build the confidence and tools for a stronger future.

To read more about achieving peace of mind in your financial future, Allstate has tips, tricks, and fixes for planning ahead and being prepared for life’s curveballs.