Compared to Previous Generations, How Bad Are Millennials' Finances?

Research suggests that though they have lower net worth, in some ways today's young adults may not be much worse off than their predecessors.

Much has been made about the shaky financial footing of Millennials. And it's true; young adults today have high rates of unemployment and student-loan debt, which can keep them in a holding pattern when it comes to starting their adult lives.

But a recent study released by the St. Louis Fed took a look at Millennials who had managed to take the first step in creating independent households—getting a job and finding their own place—in order to see how the financial health of young Americans today stacks up to that of previous generations.

"Financial well-being early in life...has important implications for lifetime wealth accumulation; recent evidence suggests that today's young adults may have accumulated less wealth than their parents had at the same age. However, because they are still in the beginning of the life cycle, today's young adults may be better equipped to weather economic upheaval than older generations, especially in the long run," the study found.

The research looked at adults aged 18 to 34 and compared their finances in a variety of categories, like overall net worth, total debt, and assets, to young adults of the same age as far back as 1989. The study found that though their overall net worth was less, many employed Millennials weren't doing that much worse when compared to their predecessors.

For those who have been able to find employment and housing that they can afford, the recession and the wage stagnation that has characterized the recovery may not have created that glum of a long-term financial picture. "Compared with young adults in 1989, young adults in 2013 were more likely to own homes, stocks, and retirement accounts. Moreover, young adults in 2013 were less likely to have high debt payment burdens than older adults, young adults in 1989, and young adults in 2001," the study found. And the median value of bank accounts, retirement portfolios, and stocks held by young Americans were equal or higher than the value of the same holdings for young Americans in 1989.

While the homeownership rate for young adults is currently at about 34 percent, down from 39 percent in the early 2000s, more Millennials have managed to purchase homes than those in 1989 did at their age. Unfortunately, thanks to the housing bust, many of these homes are worth less, decreasing the overall value of assets for young adults.

And the losses of the recession may have decreased the gap between the wealthiest young Americans and middle-class Millennials. In 2001, the net worth of young Americans in the 75th percentile was $45,400. By 2013, net worth for Millennials in the same group was only $29,400. Median net worth for young Americans between the ages of 18 and 31 didn't drop as much during that period: $8,900 in 2001 and $6,100 in 2013, shrinking the gap between the wealthiest young Americans and middle-class Americans from about about 5.1 times as high to around 4.8.