Millennials Are Financially Doomed! Or Are They?

in Financial Planning by

“Our youth now love luxury. They have bad manners, contempt for authority; they show disrespect for their elders and love chatter in place of exercise; they no longer rise when elders enter the room; they contradict their parents, chatter before company; gobble up their food and tyrannize their teachers.” – Socrates, 500BC.

Who doesn’t know a Millennial who acts spoiled, narcissistic, entitled, and completely unable to focus for longer than 15 seconds? Suddenly, ADHD is an epidemic excuse that is sweeping our youth for why they can’t do better at school or come in to work on time. There’s always an excuse, but there’s always time to update a status on Facebook or Instagram with a “selfie.” Interesting.

There seems to be an explosion of contempt for the Millennial generation – loosely defined as those born between 1980 – 2000 – with articles such as “Generation Me” splashed across the front cover of Time magazine last summer. But as you’ve just read from a quote widely attributed to Socrates 2,500 years ago, youth have been disrespecting their elders for a very long time. On the flip side, elders have been showing disdain for youth for an equally long period of time.

One theory for such contempt is that as we grow older, we get jealous that we are no longer as good looking, healthy, and vibrant as we once were. So of course, we take it out on the next generation. “Youth is wasted on the young,” as George Bernard Shaw once said, because the young are incapable of fully appreciating what they have until they are old.

At Personal Capital, we embrace the Millennial generation for their creativity and sense of purpose. There are always generational differences, but that’s what makes society great. Our main mission is to allow people of all age groups to lead better financial lives. Millennials may have less money than older demographic groups, but they have much more time to generate wealth

Below is an infographic we created with our friends at to demonstrate how a typical Millennial named “Milli” might be able to boost her retirement portfolio by 18%. The infographic purposefully simplifies asset allocation to get more young people thinking about their money. And in particular, thinking about easy ways to not leave money on the table. We believe that getting your asset allocation right is the most important part of getting on track for long-term financial health, which is why we focus on it.

Too often we hear from clients who say they regret not focusing on their finances in their 20s. By creating something easy to digest, hopefully more people will care about their money earlier on. Let’s have a look.


Millennial InfographicThis infographic was originally published on


We received a number of comments on Facebook about our infographic by Millennials, and we’re addressing five of them here based on data we have from our over 500,000 registered users and $500 million in assets under management.

Response #1: How is this a typical financial profile for a millennial? $100k in savings at age 30? An $80k per year job? Where is the crushing student loan debt listed?

Answer: We created the asset allocation for Milli, a typical Millennial, with the help of Personal Capital data. To simplify our analysis, we just showed the investments side of the picture. First, let’s note Millennials are anyone born from 1980 onwards (we looked at Personal Capital users aged 20-34).

Because of our software, we can get some nifty information on this population segment.

  • We know that they’ve got, on average, $100,000 in investible assets.
  • We look at just their portfolios to see asset allocation pictured in the infographic. Note that the cash is only cash in their investment account.
  • We don’t have income information for everyone, so we extrapolated $80,000 for total earnings (see below).

Response #2: What about student debt?

Answer: In 2010, student debt eclipsed credit card debt. Saying that the growth of student debt in the US is a huge problem is an understatement. According to the Project on Student Debt, over two-thirds of college seniors graduating last year had nearly $30,000 in debt – a figure which has climbed 6% a year since 2008.  U.S. Secretary of Education, Arne Duncan, has said about student debt that “In fact, it’s very good debt to have.”

But the problem is that student loans stay with people for life.  For the average Personal Capital user who has linked a student loan the figure is ~$40,000. That might not be so bad if salaries were increasing.  As the Economist wrote in a recent article on the student debt crisis, tuition has grown at 5x the rate of inflation salaries have “remained flat for much of the last decade. Student debt has grown so large that it stops many young people from buying houses, starting businesses, or having children.”

Response #3: I don’t know any 30 yr olds with 80k salaries, just saying.

Answer: This is a fair comment! The 2010 Census reported median income for 30-34 year olds was $39,000. We’d imagine the average is slightly higher based on the fact that the mean salary for an American is 50% greater than the median (but that figure is not reported by age group).

Why is Milli’s income higher?  $80,000 includes her total income. If you look at the numbers, if you’ve accumulated $100,000 in savings at 30, it’s about what you would have to have made.  Take a look at the hypothetical savings scheme below.  It tracks someone who graduated from college in 2006, and could afford to save $10,000 per year, with 3% earnings growth a year and a healthy 6.5% portfolio growth (of course, these are simplified assumptions):

So what can we infer from the comparison of our hypothetical individual, Milli, who managed to achieve $100,000 in savings by 30, to the median American Millennial? In all likelihood, the sample set of people who are using Personal Capital are wealthier. That selection bias makes sense to us – it’s a subgroup of the population concerned with their investments and focused on improving their financial health with the use of the (free) tools at their disposal.

Perhaps there’s more to it.  Maybe it’s also the case that using technology improves your financial picture (that’s Personal Capital mission, after all).

Response #4:Way to make me feel like I’m underperforming Mint.

Answer: Our goal with the infographic is to show Millennials how they can be doing even better. It’s easy to ignore our long-term financial health (and often, as we know from cases of crippling student debt that sometimes we’re forced to ignore it), but there are parts of our financial lives that are actually easy to get on track.  Asset allocation is one of them. Our main message: getting the right asset allocation in your portfolio is an easy way to grow money that you’ve worked hard for.

And for those who feel behind, know that reading financial blogs and using free financial software, you’re already a step ahead of the game. What’s hard is getting ahead at work, and deciding to save instead of buy. One can either get motivated to save and invest more (and invest smarter!) or do nothing and deal with consequences later. The choice is yours.

Response #5: I read last night that most 30-somethings have 42% of their portfolio held in cash. I was flabbergasted.

Answer: We’ve read other reports that are similar. For instance, a recent UBS report claimed that Millennials “are the most fiscally conservative generation since the Great Depression…their average asset allocation is extremely conservative, with the average portfolio dedicating 52% to cash, compared to 23% cash for other investors.”

That’s not what we’ve found among our users. Millennials hold 12% of their portfolios in cash – much more than they need to. That figure EXCLUDES cash in savings accounts. Having extra cash in a savings account is appropriate; we think 6 months of your spending as an “emergency funds” is prudent.

What’s more interesting about the UBS report is the qualitative data they report about Millennials. “We see investors who are extremely conservative, savers not investors, and not nearly as self-directed as one would expect. And they worry about their parents’ financial health and futures as much as they worry about their own.” While there’s been some press about the rise of the “do-it-yourself” investor, we’ve found that people like having the comfort of an expert opinion when it comes to their finances. And, tying it back to the intro


The greatest two assets Millennials have are energy and time. Eventually both will fade, so it’s important to take advantage of every opportunity while we still can. There was no such thing as Personal Capital’s free Financial Dashboard to track one’s net worth and analyze one’s investments five years ago. Take advantage of us and other free tools as much as possible. But most of all, don’t forget to save. Once you develop a systematic habit of contributing as much as possible into your 401k or IRA, and investing any leftover after-tax proceeds wisely, you’re well on your way to financial freedom.

Photo Credit: WikiImages, public domain.

Co-Writer: Catha Mullen

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Financial Samurai

Sam is the former Managing Editor of the Daily Capital blog. He worked in finance from 1999-2012 before deciding to focus full-time on his online endeavors - and the Yakezie Network. Sam is an avid tennis fan who loves to travel. He received his BA from William & Mary and his MBA from UC Berkeley.


  1. George

    lol… didn’t know that I was in this group called “millenial” (born 1981). Love your software based approach to holistic financial planning and you guys provide a great service that is worth trying out in the least.

    Everyone is different but I think these critics from the facebook page (I read them too) are thinking with a get-rich-quick mindset and not looking at the long haul. Everyone starts small and they don’t see the magic of compounding + time. My first job paid me ZERO dollars. I’m now earning $83000 per year (pretty close to your estimate BTW. My previous job 2.5 years earlier paid $68000).

    >>“We see investors who are extremely conservative, savers not investors, and not nearly as self-directed as one would expect. ”

    I don’t blame them because the educational system has felt that for some reason, financial education at the school level is not as important as physics, chemistry or biology or computers. Kids would then know that over the long term, equities outperform other asset classes as America has a somewhat freer-market than the rest of the world.

    As we have no kids yet, we live frugally and try to save as much as we can. We scrap for deals wherever we can. We get all the airline miles we can from credit cards (we’ve saved around $10,000 bucks on airline costs), start checking and savings accounts to grab bonus cash offers (So far, we’ve got $750 from Chase and Welsfargo), complete surveys to get discounts on next purchases, spending at airline mile reward oriented businesses etc. Our household has a savings rate of 35% to 45% from gross income depending on the month .

    I’m a big believer in stock market investing. It was hard to convince my wife who was born and raised here in the US to understand why I set aside 30% of my income every month for the stock market (which are all the savings from my income). I sooth her fears by building a cash position from her savings (for a two year emergency fund and a home in 2016) and contribute from it to her ROTH IRA and max out her 401K. She’s now got more faith in my decision to go all out in the markets after seeing our portfolio and networth grow in asset value and also increasing dividend income with an yield on cost of around 5% (I show her the various dashboards on Personal Capital and Mint once a month so she can stay on top and feel comfortable). My goal is to generate enough dividend income by the time I’m 40 to cover household expenses. I repeatedly warn her that we should be prepared for upto 50% paper losses if the market tumbles like 2000 or 2008 and stay the course and go discount shopping as we’re invested in sound businesses with rich cashflow.

    So she sort of gets it now but still uneasy as she doesn’t know the basics of about investing. I talk to many American youngsters who have no clue about investing or loosing money to inflation either. They see buying homes as their biggest investment while I see that as your biggest liability.

    • Financial Samurai

      Hi George,

      I love your attitude man. A positive attitude brings you at least half way to where you want to go. After all, if you don’t believe in yourself, who will?

      There’s no such thing as get rich quick. It’s about paying our dues, saving, investing, being on top of our finances, and managing risk. Best of luck to you!

      As for real estate, I just love the asset class because it is tangible. Furthermore, there’s utility and I don’t have to stress out about it.


    • Frederick

      I was like “yea, yea, yea, ok, ok” until you got to a house being a person’s biggest financial liabilty. Not sure if that’s an indictment against you or a realization that the concept home ownership has derailed from its intended purpose over the past centuries.

      And this may come off as personally insulting, but I think that pushing having kids into people’s mid to late thirties has created the millennial entitlement mentality. People are so focused on building their portfolio and career that by the time they have kids, they have already spoiled themselves, frequently leave the kids to be raised by someone else who in many cases has no vested interest in how the kid turns out, spoils the kids because they have so much disposable income and resent themselves for never spending time with them and run out of the energy requisite to properly reign in kids because they are approaching retirement age by the time the kid is in their late teens.

      Just my $0.02.

      • Financial Samurai

        Interesting perspective. Perhaps the bright side of waiting for kids is that 1) parents are more mature, 2) parents have more money to support their kids, 3) less stress since they have more money, and 4) parents have got all their entitlement out of the way.

        I’m very positive on real estate. In fact, here’s an article I wrote discuss how real estate is my favorite asset class to build wealth.

  2. Ryan

    I think you’d have to admit that using PC’s average ‘Milli’ user’s investible assets of $100,000 is a bit skewed. Those who use PC are probably above average in the salary/savings categories.

    • Financial Samurai

      The figure is skewed if you take the US millennial population as a whole, but the figure is inline with our millennial users at PC.

      Whether someone uses our free financial tools or hires us as a financial advisor or not, the point is that we must do more to educate ourselves about finances because nobody is will save us and nobody cares more about our finances than ourselves.

  3. Sean

    I think you’re missing some major criticisms in your responses to points one and three.

    On number one, the reported average is based on a sample (people who have signed up for personal capital) that is likely very non-random, with a bias towards people who actually think about investments. This skews the average size of investments upward. What you are reporting is the average for personal capital users, not for the general population. These two groups aren’t the same, and this should be made more clear.

    On number three, your explanation of median vs mean is good but I would note that the census bureau reports median for a reason: the mean is dragged upward by extremely high earners and is therefore largely irrelevant as a measure of comparison. The median is much more relevant, since it is the “middle” point in the distribution.

    • Financial Samurai

      Sean, I’ll let Catha to respond too as she was in charge of the Q&A section.

      You are right about #1, and hopefully people realize as you have realized that we’ve surveyed our thousands of Personal Capital users, who may care more about their finances than the entire American population. That said, I wouldn’t underestimate the American population.

      I strongly believe that there is MORE wealth out there than we know. What’s going on is a concept I like to call, “STEALTH WEALTH” where people who have money purposefully hide it to not attract any negative attention.

      • Catha Mullen

        Catha Mullen


        Thanks for taking the time to read and leave a thoughtful response! You’re absolutely right that 1) the average Personal Capital Millennial is not the average American Millennial, and 2) the MEDIAN is probably a better proxy for typical than AVERAGE. We’ll take your feedback for future posts!

        We were hoping for this to be both aspirational (take a look at Personal Capital users — who seem to tend to be on top of their finances) and educational (a simple re-balancing can be the equivalent of a couple of years of work). With that said, I hope you got some value out of it!

        Thanks again for your engagement.

  4. Matt

    If Milli has $100k in assets and reduces her cash holdings to 0.5% of her portfolio as you recommend, that’s only $500. I agree that you don’t need tens of thousands in a checking account but keeping such a tiny cushion means you’d risk an overdraft paying rent each month.

    • Financial Samurai

      That is a good point. Although stocks and bonds can easily be sold for cash and the economy has recovered a long ways since 2009.

      If things start turning sour again, I would raise the cash balance. I try to keep as close to $0 as possible in cash so I spend within my means and fully maximize my returns.

  5. SavvyFinancialLatina

    I do agree with the statement a millennial worries about their parents’ future. I know I worry about my parents and how I’m going to support them when they can no longer work. My husband worries about his parents and has even said he wants to stay near to help take care of them. His parents are in their 60s so they are getting older. My parents are slightly younger, but due to laborious lifestyles (immigrants), they have aged much quicker. My mom has a lot of health problems, and I’m afraid it will get worse and much more costly. So I don’t save and invest just for us, I think about the rest of my family too.

  6. LOL

    LOL @ 100k in an investment account.

  7. JW

    Interesting to see the selection bias. I have access to Fidelity’s aggregate averages through a tool in my 401k. Their data shows millennials have waaaaay less in their portfolio and even people in their 40s and 50s have portfolios just barely over $100k. Personal Capital users must be more savvy than the typical person with a Fidelity 401k.

    • Financial Samurai

      Can you share what the Fidelity account balances are showing? Actually, I think I know because Fidelity has millions and millions of users and the largest 401k provider. As a result, the balances reflect more the really difficult state of the average American.

    • sergey

      Millennials change jobs more often than older people so many have multiple 401k accounts. I personally have two and only one of them is more than 100k.

  8. Justin McCurry

    I don’t think millenials are as financially doomed as many think. There are jobs, lots of jobs.

    And any millenials that have been working for the last few years are making a killing in their IRAs and 401ks (assuming they had a properly allocated investment portfolio).

  9. rae

    Considering that the median income for college graduates of any age is in the $50k range, that Forbes recommends your annual income in retirement by 35, and someone with $100k in an account at 30 making a meager return of 5% will have far more than $400k at 65 without adding another dime to that account, I am not sure what to take from this article.

    I do know that using data of personal capital users as a barometer of a demographic, 1/2 of whom aren’t even old enough to have graduated college is a bit disengenous. I’d venture to guess that the typical millennial makes half or less of $80k and doesn’t have $20k in retirement accounts. Millennials are leaving college with an average debt of $40k at 6% and an annual income of $39k. Not really the best recipe for building wealth.

    The best part of this article was seeing mint and personal capital in some semblance of cooperation.


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