Millennials and GenX Have Economic Pain Ahead
Most of the data appears to show Boomers as the generation that enjoys the spoils of a ruined planet and a pyramid-like system of American capitalism.
Millennials are so poor they are destroying a lot of industries, simply by the plight of their economic uncertainty. Younger people have barely seen an income increase since the 1970s; coupled with a rising cost of living, that makes it difficult to save and build wealth.
GenX will have bad times in retirement and it’s going to be bleaker for every generation that comes after. GenX take the brunt of the great recession of 2008. Gen X: The generation has seen its percentage of overall American wealth plummet from roughly 35% in the early 2000s to just above 20% in 2019.
Americans above age 55 have seen an increase in wealth over time, while those younger than 55 have seen a decrease, according to data from a recent Federal Reserve report. This generation gap in wealth shows the rising wealth inequality in America that could warp capitalism further in the global recession of 2021. It’s increasingly looking like a global recession in 2020 won’t happen. Maybe the Fed was right on that one.
Ok Boomer, You can Hoard the Wealth
Business Insider summarizes some of the economic trends well by generation. Essentially, those above age 55 have seen an increase in wealth over time, while those younger than 55 have seen either a decrease in wealth or failure to accumulate more of it. That downward trend in wealth is notably centered around Gen X and millennials, who are between ages 39 to 54 and 23 to 38, respectively. Boomers are ages 55 to 73, according to Pew.
The Epidemic of Wealth and Income Inequality Will Continue in the 2020s
Generation X is now sometimes forgotten altogether in articles pondering generational differences. However as they head closer to retirement, just how bad their economic situation is, is coming to light with rising costs of healthcare.
In case you forgot those who are older than the Boomers are called the Silent Gen. But it’s Boomers who have grabbed the spoils.
As shown in the chart above, wealth for those above age 70 has increased, but it’s not as steep an increase as the increase in wealth for those in the 55 to 69 age group. This indicates that boomers are outpacing Silent Gen in wealth accumulation as they enter retirement.
How can we put this? It’s true, wealth for those in the 40 to 54 age bracket and for those under age 40 has decreased. As compared to their parents, people in their 20s are slipping down income brackets in greater numbers than those going up in socio-economic class. Income and wealth mobility is in trouble if you happen to be born more recently on Planet Earth.
This means wealth inequality becomes a dire issue for the global economy, just as healthcare costs are ballooning, which will lead to a lot of civil unrest in the 21st century.
Millennials have one saving grace, it’s inheriting boomer wealth. A study from the Federal Reserve found that while millennials have less money compared to previous generations at their age, millennial households have more money. This means GenX is actually carrying the brunt of the great recession consequences into their retirement.
Millennials Inherit Significant Boomer Wealth in the 2020s and 2030s
Millennials’ spending is the same as their parents’ when they were young when it comes to the proportion of their income going to things such as food, restaurants, and alcohol — they just have less money to spend. However for younger Millennials and GenZ it’s even worse with the student debt crisis impacting them harder.
Millennials are spending more on nondiscretionary expenses, with the cost of student debt having grown by 160% from 2004 to 2017. Young people want to spend money on experiences also because their career prospects and economic uncertainty weigh on their life-work balance. They need the experiential escape.
Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth. Millennials also may be less financially literate than some previous generations and have a diminished ability to invest their money to grow it faster.
GenX and Single Millennials Are the Most Vulnerable in Second Half of Life
Millennials are the poorest and richest generation who have decided to live life their own way, while GenX really will likely grow old significantly poorer than the Boomers did. GenZ in hustle and character may have more in common with the boomers, having witnessed some of the recession stories and having the pragmatism to prepare differently as a group.
Single Millennials might be some of the most vulnerable. The Fed found that while individual incomes were falling for millennials, it did find that family incomes for married couples (household incomes) grew, similar to Pew’s analysis. Individuals are earning less, but households are earning more.
But what if you are single?