The country’s youngest adult generation, those aged 18 to 34, otherwise known as Millennials are more likely than both Generation Xers and Baby Boomers to be saving for short and long term financial goals, but saving a for a house is low on the priority list.
The latest quarterly renters survey from mortgage giant Freddie Mac found that 92 percent of Millennials are saving for a major purchase (not necessarily a house though) and 94 percent are saving for a vacation. Those rates among Boomers (aged 51+) are 82 percent and 81 percent, respectively while Generation Xers (ages 34-51) are even less likely to be saving for those things with 77 percent and 75 percent respectively.
At the same time, renters as a whole are feeling stretched financially with 66 percent of them carrying debt each month. When saving is occurring, emergencies or other unexpected expenses are the top priority for renters with 59 percent. Another 51 percent say retirement is high on the savings list, and 50 percent say they are saving for their children’s college education. Only 39 percent of all renters say they are saving for a mortgage down payment. And most of those are Generation Xers, the most likely group to buy houses in the next three years.
Generation X renters are the most likely to be renting single-family homes and 58 percent of Xers plan to purchase their own home within three years. Only 42 percent of Millennials expect to do that and just 33 percent of Boomers are planning on buying a home soon.
For renters life continues to get more expensive. “We know rents are rising faster than incomes and now we have data to show that many renters don’t have enough to pay all their debts each month, which is forcing them to make tradeoffs, such as cutting spending on other items,” said David Brickman, Freddie Mac executive vice president of Multifamily.
In order to pay for rising rents 51 percent of renters are spending less on essentials, 52 percent say they are also delaying home buying, 35 percent are thinking of getting a roommate and 26 percent they plan to move to a more affordable rental.