If you’re a millennial, it probably won’t shock you to learn that the average salary of a millennial today is an estimated 20% lower than the average salary that a baby boomer had at the same age (in real terms). What’s more, today’s millennials are deeper in debt than their parents were at their age. Let’s take a closer look at the average salary of a millennial.
Find out now: How much do I need to save for retirement?
Before we can explore the average salary of a millennial we’ll have to define our terms. So who counts as a millennial? Depending on who you ask, some will say that those born between 1982 and 2004 count among the ranks of millennials. Others define millennials as those born between 1981 and 1997. Whatever the exact boundaries you choose, you’ll notice that many millennials came of age during the Great Recession and have earned lower salaries as a result.
To find the average millennial earnings, SmartAsset crunched the numbers using data from the Bureau of Labor Statistics. We counted millennial Americans as those who were between 16 and 34 in 2015. We found that the average salary of a millennial is $684 per week or $35,592 per year. That’s for what the BLS calls “wage and salary workers, excluding incorporated self employed.”
That number doesn’t get you very far in some of the country’s biggest cities, where the income needed to pay the average rent can easily reach six figures. It’s not surprising, then, that so many millennials are pessimistic about their chances of surpassing the living standards that their parents’ generation enjoyed.
Where Millennials Stand
Millennials lost a lot of ground due to the recession, when wages were depressed. Those who have pursued higher education have higher earnings but also tend to have a heavy debt burden. Millennials’ debt levels are keeping them from forming households and buying property. Even when you disregard student debt, which is a burden to so many millennials, the picture isn’t particularly rosy.
According to U.S. Census Bureau data, the median earnings for full-time workers age 18 to 34 were $35,845 in 1980. By 2000 the same cohort was earning $37,355. For the period of 2009-2013, however, full-time workers between 18 and 34 had median earnings of just $33,883.
Millennials have now surpassed baby boomers as the country’s largest generation. However, in terms of their earnings, millennials seem unlikely to catch up to baby boomers. Millennials with college degrees and advanced degrees have higher earning potential than their degree-less counterparts.
The Pew Research Center found that “the household income of young adults with less than a bachelor’s degree has declined in real terms since 1984.” By contrast, real earnings for young adults with a college degree increased in $1,300 in inflation-adjusted dollars between 1984 and 2009. For young adults with advanced degrees, the increase was up to $1,500 for those with a master’s degree and up to $3,400 for those with a professional degree.
The quandary many millennials faced is that they knew they needed a degree to boost their earnings but they couldn’t get a degree without taking on massive amounts of debt. That’s a story that the basic average salary number doesn’t tell. As such, millennials may especially benefit from working with a financial advisor to ensure they stay on track and get ready for retirement despite being saddled with debt early on. SmartAsset’s free matching tool makes it easier to find a financial advisor to work with who meets your needs. First you’ll answer a series of questions about your situation and your goals. Then the program narrows down thousands of advisors to up to three advisors who meet your needs and are in your area. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while doing much of the hard work for you.
Tips for Saving for Retirement
- Start early. The sooner you start saving for retirement, the more you can reap the benefits of compound interest.
- If your employers offers a a 401(k) match, it’s generally a good idea to contribute enough to take full advantage of that match.
- Don’t forget to take Social Security income into account when you’re figuring out how much you’ll need to save. SmartAsset’s Social Security calculator can help you figure out how much you’ll receive in annual payments.
Photo credit: ©iStock.com/FatCamera, ©iStock.com/Steve Debenport, ©iStock.com/FatCamera