Every generation has faced tough financial times, but for millennials, inflation, a pandemic, student loans and skyrocketing housing prices have been major hurdles to overcome. In spite of the difficult challenges, millennials are on track to become the richest generation, according to findings from global real estate consultancy Knight Frank and The Intelligence Lab.
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In fact, research from Empower revealed that 2.7% of millennials have reached retirement millionaire status and have retirement accounts with more than $1 million, averaging $1.74 million.
Here’s how millennials are getting ahead financially.
Millennials Are Gaining Greater Wealth
Before the pandemic, millennials struggled to build wealth. According to LendingTree, 88.1% of millennials had debt, which is slightly higher than the 86.9% of Gen Xers and 85.8% of baby boomers around that age.
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However, in 2024, data from Empower found that millennials increased their wealth by 14%, more than any other generation and increased their 401(k) plan balances by 15.6%, nearly twice the amount of the average American.
In comparison, Gen X and Gen Z increased their wealth by 8.8% and 9.5%.
Meanwhile, the study also showed that boomers only increased their wealth by 3.8%. It noted that as the generation approaches retirement or has already left the workforce, many are spending their nest eggs instead of prioritizing accumulating more wealth.
Stocks Helped Boost Millennial Wealth
Millennials drive their wealth by investing in stocks and mutual funds, per Empower. Data from CNBC shows that many millennials started buying stocks around age 25, compared to boomers, who didn’t begin until age 35.
Not only did the early investing give them a boost, but in the last five years, 401(k)s and brokerage accounts saw an increase from a booming market as the S&P 500 is up 23% compared to a return of 12.85% in the past five years.
Pandemic Assistance and Benefits
Besides getting a jump on investing early, timing has also played a role in millennials’ wealth. According to Empower, financial assistance during COVID-19, such as stimulus checks and child tax credits, helped Americans during 2020 and 2021. According to the Federal Reserve, government aid collectively saved households $2.3 trillion.
In addition, in 2021, interest rates were at an all-time low and fell below 3%, per The Mortgage Reports, and millennials who were in a position took advantage of affordable rates.
While millennials are starting to pull ahead financially, they have faced challenging economic times. Despite the difficult start, however, they are proving to be financially successful with the help of a bit of luck, smart decisions and hard work.
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This article originally appeared on GOBankingRates.com: Here’s How Many Millennials Have Over $1 Million in Savings
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