The latest census figures show that nearly 16% of U.S. millennials lived with their parents in 2022. This trend is significant as it indicates that younger individuals are facing challenges in affording high housing costs and may be returning to live with their families. Census data reveals that the number of Americans aged 25–34 living at home has increased by over 87% in the past two decades.
Research suggests that younger generations may be opting to live at home to save on expenses such as rent or to save for a future down payment on a home. Additionally, some young adults may be choosing to live with family members to provide care and support.
Examples of this trend include stories like Sharon Wilson's 29-year-old son and his wife living in her remodeled basement apartment in southern Minnesota. Similarly, Greg Francis from Commerce City, Colorado has two Gen Z adults at home, with one paying a small rent to cover expenses and the other staying home to avoid accumulating student debt.
Despite the challenges of affordability, there are instances where millennials are buying homes, often with the support of their families. In 2023, nearly 55% of millennials aged 27–42 owned a home, showcasing an increase from the previous year. In contrast, the homeownership rate for adult Gen Zers (aged 19–26) remained stagnant at just over 26%.
The increasing cost of rent could also influence young adults' decisions to live at home, as renting has become more expensive in recent years. This trend is reflected in the Axios Vibes survey by The Harris Poll, which indicates that renters are feeling negatively impacted by their finances.
In summary, the data suggests that a growing number of millennials and younger adults are choosing to live with their parents to mitigate financial challenges, save for their future, or provide care for family members. Additionally, while some are opting for homeownership, the rising cost of rent is influencing others to stay at home. These trends reflect the complex financial realities faced by younger generations in the current housing market.
The United States is currently at the beginning of what is being dubbed the "great wealth transfer," where an estimated $84 trillion in cash and assets is expected to move down from the older generations, such as the silent generation and baby boomers, to younger generations like Gen X, millennials, and Gen Z. This transfer of wealth involves about $72.6 trillion going to heirs and roughly $12 trillion being donated to charity. Baby boomers currently hold 50% of all wealth in the United States, followed by Gen X (29.5%), the silent generation (11.9%), and millennials (8.5%). As the older generations phase out, the transfer of wealth will significantly impact the economy and the financial futures of many households.
According to Halé Behzadi, North American head of Citi Private Bank, around 1,000 billionaires are expected to transfer over $5.2 trillion to their children in the next two to three decades. Moreover, this transfer also involves significant contributions to charities and foundations. This immense transfer of wealth is expected to create a substantial number of wealthier, younger individuals in the coming years.
The baby boomer generation has witnessed a significant increase in wealth over the years due to soaring stock market and real estate values. Although a considerable amount of this wealth will be passed down to heirs, it is anticipated that some individuals from these generations may see their wealth diminish due to expenses associated with healthcare and taxes. As a result, many are opting to give cash, investments, primary homes, or assets to their children or grandchildren while they are still alive as a means of smart estate planning.
Financial planners, like Cameron Rufus from Ritholtz Wealth Management, are working with both those who plan to pass on their wealth and those who are expecting to inherit it. Younger individuals expecting inheritances are considering using the money to purchase homes, pay off student loans or invest. However, it is advised to treat the inheritance as a bonus and not rely on it for financial planning. Additionally, having a well-thought-out estate plan is crucial for preserving as much of the wealth as possible.
This "great wealth transfer" is unprecedented in scale, especially considering the magnitude of wealth involved. Families who are part of this transfer need to prepare for the responsibility of managing and transferring wealth to the next generations. This preparation involves not only the financial aspects but also the upbringing of children and grandchildren to handle wealth responsibly.