Young Americans are falling behind on wealth accumulation
Over the past 25 years, there’s been a notable shift in relative wealth from the young to the old. The US2010 project’s recent report, based on data collected through the Survey of Consumer Finances, finds average wealth among families under age 35 dropped from 21 percent of the overall mean in 1983 to 17 percent in 2007, and that of age group 35-44 declined from 71 percent to 58 percent.
Losses in wealth among those under age 35 were especially dramatic between 2007 and 2010. In 2010, wealth for families under 35 relative to the national average was only 10 percent, and the 35- to 44-year-olds was only 41 percent, while the 55- to 64-year-olds held 181 percent of the national average.
Using the same data source, another new study from the Federal Reserve Bank of St. Louis also finds that young families were hit harder in the Great Recession. For young families under 40, average net worth dropped about 44 percent between 2007 and 2010, compared with about 18 percent for middle-aged families aged 40-61, or about 10 percent for families 62 or older.
In our own analysis of the Survey of Consumer Finances data, my colleagues Eugene Steuerle, Signe-Mary McKernan, Caroline Ratcliffe at the Urban Institute and I uncovered similar results. Today’s 47-and-up-year-olds have about twice the average net worth of those who were the same age 27 years earlier. Those in Generation X and Generation Y—what we have referred to as “the lost generation”— haven’t been quite as lucky: they’ve benefited little from the doubling of the economy since the early 1980s, and have accumulated less wealth than their parents did at the same age. Twenty-nine to 37-year-olds in 2010 have 21 percent less wealth than families of the same age in 1983. Families age 29-37 in 2010 had $15,900 in median wealth, less than half of the $46,234 median wealth of the same age group in 1983.
Using data from the Panel Study of Income Dynamics, a study from the University of Michigan again finds age disparities in changes in wealth: families age 55-64 lost four percentage points less than families under 35 years old between 2007 and 2011.
No matter how you look at it—average or median, percentage changes or one group relative to overall, different age cutoff points for the “young,” even different data sources and different time periods—Generation X and Y are becoming “lost generations.” Today’s political discussions often focus on preserving the wealth and benefits of older Americans and baby boomers. But there is an abundance of consistent, data-supported evidence that proves young Americans are falling behind on wealth accumulation—and considering the lack of attention given to the young in government budgets, it’s a serious concern.
Homepage millennial photo from Shutterstock