• 47 mins From Frenzy To Flop, The Death Of This Year’s Most Hyped IPO
  • 6 hours Are Smart TVs Spying On Us?
  • 8 hours Is Fossil Fuel Divestment A Waste Of Time?
  • 1 day A Russian Billionaire’s Space Quest To Save Humanity
  • 1 day Markets Take Breather As Consolidation Continues
  • 1 day Economic Woes Weigh On Copper Prices
  • 1 day World's Largest IPO At Risk Following Drone Strikes
  • 2 days Gold Is Beating Buffett’s Berkshire Hathaway
  • 2 days What’s Behind The Silver Sell-Off?
  • 2 days The Retail Apocalypse Is Accelerating
  • 2 days The Top Tech Stocks Of The Year
  • 3 days America’s Workforce Elderly Workforce To Double By 2028
  • 3 days Toyota Tests Solar-Powered Prius
  • 4 days Why The Gold Rally Flatlined
  • 4 days The Uranium Sector Can’t Catch A Break
  • 5 days Upcoming Fed Meeting Has Investors On Edge
  • 5 days Global Gold Sector Outlines Responsible Mining Principles
  • 6 days China’s Giant Vampire Fund Loses $120B
  • 6 days McDonalds To Roll Out Robot Drive-Thru Clerks
  • 6 days Savvy Investors Are Betting Big On This Little Data Company
  1. Home
  2. News
  3. Breaking News

Wealth Gap Widens Between Baby Boomers And Millennials

Baby Boomers

'Entitlement’ is a term that has become almost synonymous with millennials. But truth be told, disdain towards youth is nothing new: The older have whined about the younger likely since the dawn of civilization.  There is, however, one claim that really seems to ring true: today’s young adults are not only more entitled but also significantly poorer than their cohorts of generations past. 

A new study has found that the wealth gap between baby boomers and millennials has widened considerably compared to the situation 20 years ago.

According to a study by MagnifyMoney, back in 1998, the average household aged 20-35 had a net worth of $103,400 compared to an average net-worth of $747,600 for a household aged 52-70 years, or 7x bigger for the older generation.

Fast forward to the present, and the gap has widened to 12x with the younger generation boasting an average net worth of just $100,800 vs. $1,210,100 for the older group.

In other words, baby boomers are actually 3% richer than their cohorts 21 years ago after accounting for inflation while millennials are 38 % poorer than their comparable brethren from back then.

(Click to enlarge)

Source: CNBC

Hard times

To be fair, blaming the growing wealth gap and seeming underperformance by millennials on being too snobbish and lazy to bother with 9-5 grind might be an oversimplification of the real state of affairs. After all, millennials currently ought to be having  an average net worth of $167,508 just to keep up with their older brethren. The difference between expectations and reality is too stark, suggesting there might be other factors at play.

And that might very well be the case.

Related: Africa’s First Unicorn IPO Is Coming To The NYSE

First off, many millennials perhaps vividly remember the ravages of the last financial crisis and have developed a negative attitude towards investing. According to Mandi Woodruff, executive editor at MagnifyMoney, older millennials who watched their parents’ 401(k)s get decimated by that awful market crash now fear opening one themselves to avoid facing a similar fate. You might probably squawk that they should equally be encouraged by the ongoing bull market which has run much higher than any in history and minted many more millionaires. But let’s not forget that behavioral finance has found that for many people the pain of losing overpowers the joy of gaining. In other words, a sock on the jaw tends to leave a much bigger impression than a pat on the back--especially for the young.

The second, and perhaps more important, reason is that the millennials were simply born at the wrong time, with ballooning housing costs and catastrophic levels of student debt hampering their ability to accumulate wealth.

According to Zillow, the median home value in the U.S. today is $227,700 vs. $101,000 in 1990 after adjusting for inflation ($79,100 in nominal terms).

Further, millennials are badly struggling under mountains of student debt. Federal Reserve estimates that 45 million Americans owe around $1.6 trillion in outstanding student debt with more than a third being people under 30.

With support for student debt cancellation gaining traction amongst 2020 presidential candidates, millennials might yet receive some much-needed reprieve that might help them jumpstart their stalling finances.

However, they still need to learn basic personal finance 101 financial including setting up an emergency fund, taking advantage of 401(k) plans, paying off high-interest debts first and budgeting for their goals.

But most importantly, they need to learn to live within their means and stop trying to constantly keep up with the Joneses.

By Alex Kimani for SafeHaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment