Millennials Enter the Sandwich Generation Earlier and Stay Longer

The Squeeze

• Millennials now make up 39% of the Sandwich Generation, up from 25% five years ago, with the pandemic intensifying how many have to help their parents. 
• As a group, Millennials are weighed down by student loan and credit card debt, forcing them to delay home buying and other big life decisions. 53% have received financial assistance from a family member since turning 21.
• 60% of older Millennials (born between 1981 and 1989) have found their way to homeownership. However, the number of Millennials planning to rent “forever” is increasing: to 18 percent in 2021 versus 12 percent the year before.  

Millennials have ruled seemingly from day one, garnering fervent media attention — good and bad — at nearly every turn. Today, they hold the title of the largest cohort in America, at an amazing 72.1 million strong. 

Now as this demo turns 40, this radically resilient bunch who has grown up in the shadow of the Great Recession, taken on student debt levels their parents could never imagine, and navigated homeschool, caregiving and working during a pandemic is now facing what may be its biggest challenge yet.

Life in the Sandwich Generation  

Born between 1981 and 1996, Millennials are zooming into this life stage at top speed, comprising 39 percent of the Sandwich Generation today versus 25 percent five years ago, with the pandemic intensifying their parents’ need for help. As with everything Millennials do, however, these newest members of the Sandwich Generation are approaching this life stage in their own way, driven both by new points of view but also new challenges. 

Take debt. Nearly almost 4 in 5 older Millennials are dealing with student loan debt, having typically borrowed about $22,000 each, according to a Harris Poll/CNBC Make It survey. While the median monthly payment is $200, many are paying considerably more. What’s more, the average Millennial also has about a $3,700 balance on their credit card.

Those numbers add up to more than just monthly payments. They also are having a discernible impact on Millennials’ road to financial independence. Fifty-three percent of American Millennials have received financial assistance from a family member since turning 21, according to the 2018 Country Financial Security Index.

Some 60 percent of older Millennials (born between 1981 and 1989) have found their way to homeownership. However, across the whole demographic, the number of those planning to rent “forever” is increasing: to 18 percent in 2021 versus 12 percent the year before. Notably, homeownership shifts with ethnicity, with Latinx and Asian Millennials lagging, followed by Blacks. (By age 30, 51 percent of White Millennials own homes versus 20 percent of Black Millennials.)

On the income side, Millennials are considered the most entrepreneurial generation of all, with its number of small businesses already outnumbering those of Boomers. Half of Millennials surveyed plan to start a business in the next three years, and more than half say they’ll be ready to quit their job to start a business in the next six months. 

Tempering that zeal, though, is the fact that Millennial gig workers, at 44 percent, far outstrip Gen Xers (30 percent) and Boomers (26 percent). While participating in the gig economy can be a good way to cultivate multiple income streams and afford flexibility, it can create financial hurdles due to a lack of healthcare and retirement benefits. 

Building Financial Wellness

While many challenges remain for any demo entering the Sandwich Generation, hope springs eternal for this resilient and resourceful group. Here are a few of the considerations they’ll need to build their own distinctive path to financial wellness. 

Get retirement-ready. Heads up, there’s a dichotomy going down: According to the National Institute of Retirement Security, 66 percent of working Millennials have nada saved for retirement. But that doesn’t mean this generation isn’t building wealth. 

Nearly a quarter of Millennials now report having $100,000 or more saved (including retirement funds), up from the mere 16 percent who had hit this milestone in 2018, according to a new report from Bank of America. This ability to save is notable and commendable; it just needs to grow. 

The popularity of the FIRE movement (Financial Independence, Retire Early) among this age group has driven some of this good behavior. Now, says Kevin L. Matthews II, a financial advisor and educator at BuildingBread.com, it’s time to go further and question certain assumptions — as in where you live and why: “With remote work soaring, could you live in a more affordable location and open up some breathing space in your budget?” 

For those who aren’t yet stashing cash, now is also the right time to consider and contribute to retirement options, so get informed, empowered and ready for your days as an elder. As Matthews sees it: “You may at times have to lower your retirement contribution but never lose it. If you think you are stressed now, it will be worse if you hit retirement age with no savings.”

Recognize the wealth gap. Between 2016 and 2019, Millennials saw their wealth gain by more than 80 percent, thanks to stock-market and home-ownership boosts. Black Millennials aren’t enjoying these gains, however; for while the typical White family in this age range has about $88,000 in wealth, a Black one only has approximately $5,000. Closing this generational gap can involve the same paths that have given Whites wealth, like investing in stocks, owning one’s own business, buying real estate and scrutinizing student-debt options. Financial planning can guide these efforts for maximum impact.

Face up to eldercare options. On average, a family caregiver spends $7,000 out-of-pocket annually, a figure that soars to $12,000 if the care recipient is an hour or more away location-wise, says AARP. Imagine if you had that amount of money to invest and see your money compound and grow. 

That's why it’s important to explore how to help your aging parents before the situation feels desperate. With all kinds of options being advertised – reverse mortgages, life insurance – it’s wise to talk to a financial planner with estate insights before making any purchases. Matthews points out, for example, that for some Millennials, either having the parents move in or moving into the parents’ place and having them provide childcare can be a win-win.

Balance educational expenses. Millennials know all about student loan debt, but also know about saving for the next generation as well. A survey by social investing platform Collegebacker.com finds that Millennials are 43 percent more likely than Boomers and 24 percent more likely than Gen Xers to begin to saving before their children turn 5. As their kids age, it will be vital to know all there is to know regarding financial aid, grants and students loans to ease their own children’s launch into adulthood.

In the end, building wealth and saving for the future is possible, even when the media still wants to call you slackers. And if you need help, just tap your nearest slacker GenXer to share tips.