New Study Highlights Why Millennials Are Not Saving Enough
For years now there has been a clash between two positions on why
The counter argument is that millennials are able to spend money on consumer goods and services because they have become relatively cheaper, and mass market accessible, over the years. But on
A new study released this week by the Institute for Fiscal Studies has added support to the latter position. The research, led by IFS associate director Rowena Crawford and research economist David Sturrock supports the conclusion that the inability of millennials to build long term wealth is less of a lifestyle choice than one dictated by contemporary conditions. As such, the report concludes that it may not be appropriate to judge the current generation against the benchmark of those that came before them.
The research found that the last generation that can be shown to have accumulated
“There is a question about whether stalling wealth accumulation represents a failure by younger generations to save enough. One claim is that young people are
prioritisingthe present, spending too much on the much-mocked avocado toast, for example, and not saving enough for their future.”
Previous generations benefitted from a combination of soaring property prices, which were still low enough,
The report also suggests that the stock market gains of the 1980s that older generations benefited from
Slowing growth in productivity is put forward by the report as a reason why it is tougher for the millennial generation to accumulate wealth. But the productivity gains that new generations of companies across technology, biotechnology and other cutting edge sectors or new business models are offering shows there is still hope for the future. And investing in stock markets and the companies driving these new productivity gains is surely one way millennials can hope to accumulate wealth.
So maybe the truth is somewhere in the middle. Yes, in many ways it may be harder for millennials to accumulate wealth in the same way their parents and grandparents did so. But that doesn’t mean there aren’t other ways. Saving at interest rates that mean wealth is chipped away at over time might no longer hold much attraction. But investing still should.
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