This archive report was first published on 14 August 2019.
Millennials Lag Behind in Wealth Accumulation ¶
According to a recent analysis by MagnifyMoney, the average American millennial household (ages 20 to 35 in 2016) has an average net worth of $100,800, while the average American baby boomer household (ages 52 to 70 in 2016) boasts a net worth of $1.2 million, a staggering 12-fold difference.
Published on August 14, 2019, this finding highlights the widening generational wealth gap in the US. The disparity is not surprising, given that baby boomers have had more time to accumulate wealth. However, a comparison with previous generations reveals a more concerning trend.
As reported by CNBC's Mallika Mitra, citing MagnifyMoney's analysis of Federal Reserve data on household assets and liabilities, the wealth gap between older and younger households has nearly doubled in the past 20 years, climbing from seven to 12 times the net worth.
Between 1998 and 2016, the average net worth for households aged 20 to 35 declined by $2,600, while households aged 52 to 70 saw a significant increase of $452,400 in net worth.
Experts point to the Great American Affordability Crisis as the primary cause of this widening wealth gap. Rising living costs, increasing student-loan debt, and the ongoing fallout of the recession have created significant financial struggles for millennials.
Student-loan debt, in particular, has become a major burden for millennials. The national student-loan debt total exceeds $1.5 trillion, with the average student-loan debt per graduating student in 2018 reaching $29,800.
According to a report by Merrill Lynch Wealth Management, 81% of early-adult households aged 18 to 34 carry a collective debt of $2 trillion, including student-loan debt and credit card debt.
Additionally, rising housing costs have made it increasingly difficult for millennials to buy homes, further exacerbating the wealth gap.
The aftermath of the Great Recession has also had a lasting impact on millennials' financial habits, with their wealth levels 34% below where they would have been if the financial crisis hadn't occurred, according to a report by the St. Louis Fed.
