Here is some new information I will be sharing with my GOP-fire-breathing dad this Thanksgiving. The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data released Monday.
While people typically accumulate assets as they age, this wealth gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation. The 47-to-1 wealth gap between old and young is believed by demographers to be the highest ever, even predating government records (see the full article here).
The good news is, for older folks, the median net worth of households headed by someone 65 or older was $170,494. That is 42 percent more than in 1984, when the Census Bureau first began measuring wealth broken down by age. The median net worth for the younger-age households was $3,662, down by 68 percent from a quarter-century ago, according to the analysis by the Pew Research Center.
But for Millenials, Generation Y’ers, things are not looking so good. Older Americans are staying in jobs longer, while young adults now face the highest unemployment since World War II. As a result, the median income of older-age households since 1967 has grown at four times the rate of those headed by the under-35 age group.
Yes, I’m an outlier in this country with my six-figure salary at 28, but I recognize that the majority of people my age are not being paid a fair rate to keep up with the pace of inflation. Still — I can’t afford a house where I live on my six-figure salary (again 1br condos go for $500k here). According to Pew, housing has been the main driver of these divergent wealth trends. Rising home equity has been the linchpin of the higher wealth of older households in 2009 compared with their counterparts in 1984. Declining home equity has been one factor in the lower wealth held by young households in 2009 compared with their counterparts in 1984.
These age-based divergences of households widened substantially with the housing market collapse of 2006, the Great Recession of 2007-2009 and the ensuing jobless recovery. But they all began appearing decades earlier, suggesting they are as much linked to long-term demographic and social changes as they are to the sour economy of recent years.
Another trend of “non wealth accumulation” I’m part of — for the young, these long-term changes include delayed entry into the labor market and delays in marriage—two markers of adulthood traditionally linked to income growth and wealth accumulation. I didn’t get too much of a delayed start into the job market, and made up for lost time, but with the current state of the economy it’s even harder to get one’s foot in the door. I don’t envy my sister who will be graduating college next year.