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The staggering millennial wealth deficit, in one chart

WedgeX

WedgeX

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Oct 27, 2017
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The chart compares each generation at the same median ages to draw comparisons.

Few things capture the precariousness of life for today's young adults like a visualization of their wealth.
Economist Gray Kimbrough did just that, using Federal Reserve data to compare how generations fared financially at different points of their life cycles.
Wealth is a measure of what people own: their assets (which typically include homes, cash savings and stocks) minus their debts (like mortgages, student loans, consumer debt). Its importance to an individual, a nation or an entire generation cannot be overstated; it gives families a safety net during hard economic times, such as a layoff, and is intertwined with such milestones of adult life as buying a home, starting a business or retiring comfortably.
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One important caveat to the chart above is that the three generations aren't the same size, population-wise. In 1990, for instance, boomers accounted for 31 percent of the total U.S. population. In 2008, GenXers were only 22 percent of the population.
So we can say that in 1990, boomers owned 21 percent of the nation's wealth and represented 31 percent of the population, for a wealth-to-population ratio of 0.68 — each percentage point of the total U.S. population represented by boomers, in other words, owned 0.68 percent of the wealth.
In 2008, on the other hand, Gen Xers owned 9 percent of the wealth and made up 22 percent of the population, for a wealth-to-population ratio of 0.41.
That's a smaller generational deficit than the raw numbers suggest, but it's still a significant one. It illustrates the size of the financial hole today's young adults are in relative to their parents. It's a hole they'll never truly be able to dig out of, given the way that money draws other money to itself via the gravitational pull of compound interest: The less money you start out with, the less you'll make during the rest of your life.
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We Millennials are pretty far behind, and not so likely to catch up.


And on the measure itself:


Gray 'serial millennial myth debunker' Kimbrough

@graykimbrough

Replying to
@ewrigleyfield
Indeed, it's a weird measure! It doesn't show the mean or median net worth for each generation member, because the Fed doesn't supply that. However, to the extent that aggregate wealth tracks certain types of power in our society, this definitely has meaning for generations.
4:45 PM · Nov 24, 2019·Twitter for Android
 
AnotherNils

AnotherNils

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Oct 27, 2017
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I have to say, I'm really, really curious what happens when the Boomers die off. That money is going to other people and I'm not sure Gen Xers will just stow it away like their parents did.
 
BarryFishFinger

BarryFishFinger

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Oct 27, 2017
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I thought millennials didn't want to own houses anyway, they're all about the renting? According to Era anyway...
 
Stinkles

Stinkles

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Oct 25, 2017
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Boomers vote more than everyone else - because they're retired, or busybodies. They vote GOP on average, and the GOP ensures that voting is efficient and accessible in places where they live and difficult where they by and large don't.

They tend NOT to live in urban centers.

They use more land, electricity and resources.

They often got free or subsidized education as a direct result of their parents' GI bill and other post war measures.

They continue to vote for a party that gives them a small tax cut in exchange for certain recession and on average a war.

They have some of the best racist words.

They are responsible for cool laws that allow them to keep driving even after they smash through a farmer's market in a pearlescent white cadillac.

They believe everything they read on facebook or see on fox.

Some of them, I'm sure, are good people.
 
Nothing Loud

Nothing Loud

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AnotherNils said:
I have to say, I'm really, really curious what happens when the Boomers die off. That money is going to other people and I'm not sure Gen Xers will just stow it away like their parents did.
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It's going to go to their descendants, usually white people who have profited off of decades of wealth building/home ownership and aren't first generation immigrants like me
 

QuigleyMcShine

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Jan 29, 2018
9,384
I'm curious how the data would look if you subdivided millennials into smaller groups, like born in the 80s vs born in the 90s. I and the millenials I grew up with seem to he doing fine - own homes even if a little later in life than our parents did, sizable student loan debt but privileged enough to be able to make the payments without living paycheck to paycheck. Of course my social group is partly determined by my privilege, but some of it is also just who was in my high school. I wonder if younger millennials are having an even tougher time of it than millennials as a whole?
 
Casualcore

Casualcore

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Jul 25, 2018
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I mean, some of the wealth will go to descendants. Some will be left to mega-churches and pet dogs. Some will go to living it up in retirement, some to end-of-life care. A lot of it will be destroyed in the stock markets in subsequent crashes due to the next housing crisis, climate change causing environmental and economic destruction, the next world war, civil wars erupting across the globe as war refugees continue and climate refugees start up, etc, etc. Who knows if the current relative global economic stability will outlive the boomer's stock portfolios.
 
PMS341

PMS341

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QuigleyMcShine said:
I'm curious how the data would look if you subdivided millennials into smaller groups, like born in the 80s vs born in the 90s. I and the millenials I grew up with seem to he doing fine - own homes even if a little later in life than our parents did, sizable student loan debt but privileged enough to be able to make the payments without living paycheck to paycheck. Of course my social group is partly determined by my privilege, but some of it is also just who was in my high school. I wonder if younger millennials are having an even tougher time of it than millennials as a whole?
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Guess it depends on age/location/etc. I'm in the South, have been my whole life, and at 30, I don't personally know a single person who owns a house. Most of my friends have over 10k in student loans of some sort, though.
 
OP
OP
WedgeX

WedgeX

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Oct 27, 2017
13,162
QuigleyMcShine said:
I'm curious how the data would look if you subdivided millennials into smaller groups, like born in the 80s vs born in the 90s. I and the millenials I grew up with seem to he doing fine - own homes even if a little later in life than our parents did, sizable student loan debt but privileged enough to be able to make the payments without living paycheck to paycheck. Of course my social group is partly determined by my privilege, but some of it is also just who was in my high school. I wonder if younger millennials are having an even tougher time of it than millennials as a whole?
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I don't know that Millenials have enough wealth on the whole for it to change much. ~7% of the wealth split down further really doesn't leave much between the two. I would actually suspect Millennials born in the 90s to do better than those of us born in the 80s. They came out of college at the earliest after the US economy began to recover, while many of us born in the 80s had to contend with the loss in earnings, etc. with graduating just before or during the Recession.
 
mugurumakensei

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Oct 25, 2017
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QuigleyMcShine said:
I'm curious how the data would look if you subdivided millennials into smaller groups, like born in the 80s vs born in the 90s. I and the millenials I grew up with seem to he doing fine - own homes even if a little later in life than our parents did, sizable student loan debt but privileged enough to be able to make the payments without living paycheck to paycheck. Of course my social group is partly determined by my privilege, but some of it is also just who was in my high school. I wonder if younger millennials are having an even tougher time of it than millennials as a whole?
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The youngest millennials and gen z are doing better than middle bracket millennials since they started jobs after the recession so their starting salaries are much better than those aged 32-34. Basically, if you graduated from undergrad after 2012 or you could afford to get a masters degree and postgrad completed in 2012 or later, you avoided the worst of it and are doing pretty well.
 

QuigleyMcShine

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Jan 29, 2018
9,384
mugurumakensei said:
The youngest millennials and gen z are doing better than middle bracket millennials since they started jobs after the recession so their starting salaries are much better than those aged 32-34.
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Makes sense, I guess I (32) got lucky. I got my job that I'm still at days before the downturn in summer 2008. I'm likely underpaid since I've never job-hopped, and my first few raises were likely recession limited.

It's definitely weird though having to constantly remind myself of the bubble I live in when reading about how millennials can't afford homes, when 90% of the millenials I know own houses.
 
BrightLightLava

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WonkyPanda said:
Wait, why is this funny? The biggest transfer in wealth in our history is anticipated in the next 2 decades. Direct descendants are assuredly in line to be primary beneficiaries of such wealth.
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I can only speak for myself, but I'm super excited to inherit two 15 year old cars and a pretty big but hopelessly outdated TV. Can't wait, really.
 
Zip

Zip

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Oct 28, 2017
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WonkyPanda said:
Wait, why is this funny? The biggest transfer in wealth in our history is anticipated in the next 2 decades. Direct descendants are assuredly in line to be primary beneficiaries of such wealth.
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Because it will not be a neat and clean 100% wealth transfer. It will be eaten at by various groups (long-term care/health, government taxes/fees, etc), split between multiple descendants, and come at a later stage in life than boomers had wealth.

And as others have pointed out, that is for whatever is left from general retirement spending.

I remember my mother complaining about her income being half of what it used to be when she retired, which...brought her and my dad down to the level of my wife and I working full-time (but with grown kids and no mortgage left to pay). The older generation's spending reflects their accustomed lifestyle from years of relative wealth.
 
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Lord Fagan

Lord Fagan

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WonkyPanda said:
Wait, why is this funny? The biggest transfer in wealth in our history is anticipated in the next 2 decades. Direct descendants are assuredly in line to be primary beneficiaries of such wealth.
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Duder, that money isn't for their kids. It's to fuel the conspicuous consumption of their retirement and the last 1-2 years of premium healthcare clinging to this mortal coil. After 2 decades there won't be anything left.
 
OP
OP
WedgeX

WedgeX

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Lord Fagan said:
Duder, that money isn't for their kids. It's to fuel the conspicuous consumption of their retirement and the last 1-2 years of premium healthcare clinging to this mortal coil. After 2 decades there won't be anything left.
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Anecdotally this is what I've heard related to Boomers with moderate wealth. But it's only anecdotes.
 
WonkyPanda

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Oct 26, 2017
876
Individual retirement accounts, roughly 9 trillion, compounded with real estate, is an extremely large transfer of wealth. Of course it isn't 1:1; but, balking at the notion that we're looking at anywhere from ~30-60 trillion dollars by latest estimates isn't going to just evaporate due to prolonged care. The amount of wealth that boomers have is a bit ridiculousl and thinking a large subset of them are going to eat through it like cake isn't just pessimistic, it isn't suggested by current estimates.
 
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OP
WedgeX

WedgeX

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Oct 27, 2017
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Lord Fagan said:
The graphs charting the baby boomers' sudden course correction towards frugality and personal sacrifice will undoubtedly put your OP to shame, yeah?
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For real.

To clarify just in case, my anecdote was in support of your point - Boomers planning to spend their wealth down for their own comfort instead of passing things along.
 
AliasGreed

AliasGreed

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Oct 31, 2017
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Lord Fagan said:
Duder, that money isn't for their kids. It's to fuel the conspicuous consumption of their retirement and the last 1-2 years of premium healthcare clinging to this mortal coil. After 2 decades there won't be anything left.
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Nothing wrong with this. If I make to old age, I'm spending all my money traveling and doing shit. I'll pay my kids education after that good luck kids.
 
Sunster

Sunster

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Oct 5, 2018
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Polymerization said:
Wouldn't this chart change once millennials inherit the assets of their boomer parents who'll begin dying off in 15-20 years?
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My dad worked at CSX
big freight train company in US
for 30 years. he was forced to retire at 60 because his job was eliminated. He's got a fat pension that he will receive I think when he's 62. Are we, his 4 kids going to see any of it? lmao no. his new wife (half his age) and baby will get it. I'm sure many other millenials can relate in some way or another. boomers gonna boomer.
 
Lord Fagan

Lord Fagan

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WedgeX said:
For real.

To clarify just in case, my anecdote was in support of your point - Boomers planning to spend their wealth down for their own comfort instead of passing things along.
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Oh, we're cool. This kind of data is maddening for people with real skin in the game, and while I keep the safety off in this kind of rhetorical combat, I do try to aim in the right directions, because the whole idea of just watching it all burn is some bullshit I won't endorse.

In fact, I'll double down and admit that I'm the kind of nut job who openly encourages fellow millennials to do everything in our power to save the boomer's from themselves, in direct spite of their documented selfishness. If we do, we'll redeem them, because they bore us, raised us, educated us, and whether they liked it or not enabled us to make them the architects of their own salvation. Kicking and screaming, we must drag them into a brave new world.

The alternative would be a world where we eat them alive, and our children's generation watches us and thinks, "this is the way."
 
Kmonk

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Lord Fagan said:
Duder, that money isn't for their kids. It's to fuel the conspicuous consumption of their retirement and the last 1-2 years of premium healthcare clinging to this mortal coil. After 2 decades there won't be anything left.
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LOL this is so my parents. All my trips as a kid consisted of driving a few hundred miles in a beat-up station wagon, and often involved camping in tents. Now, my folks take a weeks-long vacation to Europe each year to check shit off their bucket lists, as well as multiple other international trips. And I expect them to keep doing this for years, because their incredible insurance plan keeps them in insanely good health.

I've never expected a cent in inheritance, and I prefer not to be beholden financially to them and their weird values, so I'm not concerned. But it is a good example of how boomers never spare any expense when it comes to themselves.
 
PMS341

PMS341

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WonkyPanda said:
Wait, why is this funny? The biggest transfer in wealth in our history is anticipated in the next 2 decades. Direct descendants are assuredly in line to be primary beneficiaries of such wealth.
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Medical costs usually eat up everything before death. My father passed from cancer a few years ago and we still owe money for mortgage payments, healthcare costs, etc. He worked six days a week for ~40 years and died with a negative balance in his bank account.

Outside of healthcare, those with money in retirement mostly just spend it all.
 
Extra Sauce

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as the son of baby boomers, I don't expect any wealth transfer because of the costs associated with a long period of retirement.

unfortunately our generation ain't getting that nice long retirement.
 
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