Millennials may face crushing student loans and a bad job market, but if they follow the “success sequence” — high school degree, full-time work, and marriage before having children– they are more likely to prosper financially.
A study from the American Enterprise Institute and Institute for Family Studies found that 97 percent of millennials who followed this sequence are not poor by ages 28-to-34.
Millennials have diverged from baby boomer generation traditions. A record 55 percent of millennials (28-34) had children before marriage, while only 25 percent of baby boomers had them at that age. Although millennials have taken different paths to family life, the three steps explored in the study are key to financial security.
86 percent of millennials who married first have a family income in the middle or top third of income distribution, compared to only 53 percent who had kids first. 73 percent of unmarried young adults have incomes in the middle or top third.
“Compared with the path of having a baby first, marrying before children more than doubles young adults’ odds of being in the middle or top income tiers, after adjusting for education, childhood family income, employment status, race/ethnicity, sex, and respondents’ scores on the Armed Forces Qualifying Test (AFQT), which measures intelligence and knowledge of a range of subjects.,” IFS’ Brad Wilcox wrote.
This study holds for all income levels and ethnicities. 73 percent of millennials from low-income families who married before having kids reached the middle or third income by early adulthood. 76 percent of African American, 81 percent of Hispanic, and 87 percent of white young adults who married before having kids are in the middle or top third of income distribution.
While the marriage step is important, the other two should not be ignored. 31 percent of millennials who only completed the first step, graduating high school, are in poverty by their early 30s. Just 8 percent who completed the first two steps are in poverty by the same age.
In contrast, 53 percent of those who completed no steps are in poverty by ages 28-34.
The study concluded that public policy should incentivize these sequence steps in order to grant future generations the best opportunity to avoid poverty and pursue the American dream.