Millennials want different lives than their Boomer forebears.

In my twenties, forty years ago, I followed a precise checklist of the things that made a good life: Get a good education, get a good job, get married, start a family, buy a house, start a business, buy a vacation home. By age 50, I had done all those things – and was following step by the step the exact same path my father followed in his generation.

My own children, as with many Millennials, value experiences over things. If they could fit all their possessions into a rolling suitcase and a laptop bag – done! I also can see the decisions made by the young adult children of my older clients. Half of these young adults want the conventional path I chose but the other half want totally different lives for themselves compared to their parents. Not better, not worse, just different.

As an investor, I’m always on the lookout for information that will broadly affect the companies we invest in. Let’s examine five defining trends of the Millennial generation and consider how each will impact
our collective economic future.

1. Married less. In the last 100 years, marriage rates declined steeply. Between the ages of 25-37, 83% of Silent Generation (born 1928-1945) members had already married. That figure dropped to 65% for Baby Boomers, and finally below half (44%) for Millennials.

→What it means: Fewer marriages also means fewer children (the U.S. fertility rate set new record lows in the 2010s), and in the long run, less demand for big houses. COVID-19 and vanishing inventory heated up the housing market last year, but sky-high prices and rising interest rates will cool demand. Certain boomer families expect to fund their retirement by downsizing their home, but what if Millennials don’t want or can’t afford to buy?

2. Tons of debt. Collectively, Millennials hold more than $500 billion in student debt. More individual Millennials have student debt than any other single generation. Unsurprisingly, Millennials have named “being debt free” as their #1 financial objective, according to a YPulse survey.
→What it means: Millennials have less purchasing power, which naturally reduces their interest in non-essential purchases. Combine this with a trend toward informality in the workplace, and bankruptcies like Brooks Brothers’ start to make sense. Expect a continuing trend away from showy retail items and more focus on purchasing experiences.

3. Older homeowners. The median age for U.S. homebuyers is 47, and the median age of first-time homebuyers has risen to 33 (the oldest since the National Association of Realtors began racking it in 1981).
→What it means: While buying a home remains a financial goal for many Millennials, more debt and reduced family obligations should push homeownership farther and farther into the future. Less household formation means less demand for furniture and other home goods like washer/driers.

4. Jet-setters. The average Millennial takes five trips per year, three of which cross national borders. That represents more international trips than Gen X and more trips overall than Boomers.
→What it means: Though some of the travel trend has to do with Millennials’ relative youth, other factors like remote work and delayed family formation support a peripatetic lifestyle. Millennials will age, but, again, the focus on experience over things will drive their spending.

5. Better investors. Compared to all previous generations, Millennials and Gen Zers save more and start investing earlier. The interest stems in part from the desire to pay down debt. Also, investment websites like Robinhood and Betterment lower the barriers to entry by providing low cost or no cost investing along with education. Additionally, young investors (women especially) care more about socially responsible investing. To Millennials, investing means more than just allocating capital; it means furthering the causes
closest to their hearts.
→What it means: Expect a continued trend toward corporations acting as global citizens and capital flowing to those who most pointedly endorse ESG-related causes.

David Edwards is president and wealth advisor with Heron Wealth, a $500 million registered investment advisor based in New York City working with 225 client families across the U.S. and around the world. Dustin Lowman contributed additional research for this column.

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