YOUNGER GENERATIONS ARE POORER THAN THEIR PARENTS

Millennials have less wealth than their parents did at the same age. Why?

An entire generation may have missed out on economic opportunities that their predecessors enjoyed, according to analysis from The Federal Reserve Bank of St. Louis. The report seems to suggest that millennials are likely to have less wealth than their parents did at the same age.

The Federal Reserve went as far as calling older millennials a “lost generation.”

WHY YOUNGER GENERATIONS ARE POORER?

According to recent Federal Reserve data, millennials collectively control about 6.6% of the total household wealth in the United States in 2022. Baby boomers control 50.4% — far more than any other cohort.

Studying past wealth cycles, the St. Louis Fed report found that those born in the 1980s had 34% less wealth than their parents did at the same age. This is concerning because “asset appreciation is unlikely to be as rapid in the near future as it was during the recent period,” according to the report.

Lack of affordability and economic crises appear to be the primary reasons for this wealth gap. Millennials entered the job market right after the 2008 financial crisis, which significantly impacted their lifetime earning power.

Meanwhile, assets like real estate have become unaffordable for millennials, preventing them from building wealth the same way their parents did.

This generational curse isn’t unavoidable. Everyone’s wealth-building journey is unique and there are always ways to accumulate assets.

Vishesh Raisinghani