Many American millennials think they'll be millionaires by middle age and have a generally positive view about their finances, according to several studies.

However, research shows a different reality: Millennials are behind financially.

Millennials got a slow start to building wealth because of the Great Recession, and a rising cost of living has made it harder for them to save.

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Some American millennials are pretty positive about their financial situations.

More than 50% of them think they'll be millionaires one day, according to a 2018 TD Ameritrade survey, and more than a quarter of that group believes they'll reach that milestone by age 40.

Other studies similarly revealed millennials' optimistic mindset: The investment-research platform YCharts found more than half of those ages 22 to 37 thought they'd become millionaires by age 45, according to Catey Hill of MarketWatch; LendEDU found that more than half of millennials think they'll be wealthier than their parents; and 37% of millennials said in an INSIDER and Morning Consult survey they think they're better off financially than they thought they'd be 10 years ago.



But reality paints a different picture than the one millennials are envisioning.

Millennials are less wealthy than previous generations were at their age at any point between 1989 and 2007, according to The Economist, which cited a recent paper by the Brookings Institution. Median household wealth was roughly 25% lower for those ages 20 to 35 in 2016 than it was for the same age group in 2007.

Meanwhile, a report by the Federal Reserve published in November found that millennials have much less money than Gen Xers and baby boomers had at their age: "Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth," the study said.

Read more: Millennials have been called the 'brokest' and the 'richest' generation, and experts say both of those are true

Millennials born in the 1980s are at the greatest risk of becoming a "lost generation" for wealth accumulation, according to a 2018 report by the Federal Reserve Bank of St. Louis. As of 2016, people born in this decade had wealth levels 34% below where they would most likely have been if the financial crisis hadn't occurred, the report found.

Millennials are financially behind because of external economic circumstances

Because older millennials entered the workforce during the Great Recession, they've been scrambling to catch up ever since and have been the slowest cohort to recover from it.

They often weren't able to save or accumulate the amount of wealth they anticipated — especially if they didn't move to markets where job prospects were better or wages were enough to allow for savings, Jason Dorsey, a consultant, a researcher of millennials, and the president of the Center for Generational Kinetics, previously told Business Insider.

"Older millennials are often realizing they're going to have to play catch-up with their finances if they want to ever be able to retire, but some of them have already decided that they likely will not ever be able to afford to retire," he said. According to the INSIDER and Morning Consult survey, about 9% of millennials expect to never retire.



There's also the student loan debt problem. The national total student debt is over $1.5 trillion and the average student loan debt per graduating student in 2018 who took out loans is $29,800, according to Student Loan Hero.

Along with rising costs for rent, homes, childcare, and healthcare, the increasing cost of college has made it difficult for millennials to keep up with the cost of living, let alone save, despite a 67% rise in wages since 1970, according to research by Student Loan Hero.

Read more: The Great Recession split the millennial generation down the middle, creating 2 groups with very different financial habits

Consequently, more than half of millennials are relying on money from their parents to get by, according to the Country Financial Security Index. And while most millennials have savings accounts, according to the INSIDER and Morning Consult survey, more than half of them have less than $5,000 saved.

But while millennials got a slow start to building wealth, they are making an effort to catch up, which might explain their optimism.

"We are overall positive on how millennials will fare financially due to baby boomers retiring, potential inheritance, and the very low unemployment rate creating near-term job opportunities," Dorsey previously told Business Insider.

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