How big is the generational wealth gap in America? | Self (2024)

In 2021, the average net worth in an American household aged 64-75 reached over $1.2m [1] Federal Reserve - Changes in U.S. Family Finances from 2016 to 2019: Evidence from the Survey of Consumer Finances - Accessed October 2021 https://www.federalreserve.gov/publications/files/scf20.pdf, while the average household under 35 had a net worth of just $76k. With these massive generational wealth gaps, Self decided to dig deeper into the historical wealth distribution of different generations to understand whether the wealth gap has always been so vast.

Key findings:

• The average 64-75-year-old American is 94% wealthier than the average 35-year-old
• Today’s 40-year-olds own half the wealth of older generations when they were the same age
• Baby boomers owned 33% more real estate than Generation X at the same age
• Baby boomers are collectively 10 times wealthier than millennials
• Millennials are 24% behind Generation X in terms of wealth accumulated

The generational wealth gap

In the U.S., household wealth has traditionally seen a relatively even distribution across different age groups. However, over the last 30 years, data from the U.S. Federal Reserve [2] The Fed - DFA: Distributional Financial Accounts - Accessed November 2021 https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/#quarter:119;series:Net%20worth;demographic:generation;population:all;units:shares shows that older generations have been amassing wealth at a far greater rate than their younger cohorts.

In 1998, the American population under 40 years old held 13.1% of America’s total wealth. Today, those under 40 hold only 6% of the total wealth. This means that millennials and Generation X own less than half of the wealth that older generations owned when they were the same age.

In 2021, the vast majority of the country’s wealth (78.1%) belonged to the older generations with baby boomers owning a whopping 52.2% of the country’s wealth, while the silent generation owned 15.2%.

Generation X (aged between 41 and 56 years) owns 27.6% of the country’s total wealth, while millennials (25-40 years) only possess 5% of the country’s total wealth. Hence, as a group, baby boomers are more than 10 times more wealthy than millennials.

If we look closer at the wealth distribution of millennials, it was recently revealed [4] Minnesota Reformer - Millennials are the largest workforce and the least wealthy — why? Accessed November 2021 https://minnesotareformer.com/2021/08/11/millennials-are-the-largest-workforce-and-the-least-wealthy-why-politics/ that Mark Zuckerberg, who has an estimated net worth of $97 billion, single-handedly owns 2% of all millennial wealth.

How much real estate does each generation own?

In 2021, the baby boomer generation owned 44.1% of all real estate in the U.S. Generation X owned 31.2%, millennials 11.2% and the silent generation 13.6%.

Back in 1996, when the baby boomers were the same age as Generation X are today, they owned 41.6% of the real estate in the U.S. This is 33% more than Generation X owns in real estate today.

What baby boomers own

While baby boomers own the largest chunk of real estate compared to other generations, this is not where most of their wealth is held. Out of the baby boomers’ total wealth, 20.6% is in real estate. The largest portion (28.3%) comes from corporate equities and mutual fund shares followed by pension entitlements at 21.2%.

Other assets account for 17.8% of their wealth, while private businesses and consumer durables account for 8.7% and 3.4% respectively.

What millennials own

Although millennials only possess 11.2% of the nation’s total wealth relating to real estate, this is where most of their money (34.1%) is held.

Pension entitlements account for 21.8% of the millennials’ wealth, 18.1% are tied up in other assets, 9.7% in consumer durables, 8.3% in private businesses and 8% in corporate equities and mutual funds.

The value of assets: baby boomers versus millennials

If we dive deeper into the assets owned by baby boomers and millennials, we can see that there’s a significant difference in the value of the assets owned.

The value of the total real estate owned by baby boomers is worth $14.87 trillion. The real estate owned by millennials is worth a quarter of that at $3.79 trillion.

The difference in value of the corporate equities and mutual fund shares is even greater between the two generational groups; baby boomers own equities and funds to a total value of $20.3 trillion. millennials, on the other hand, only own $0.88 trillion in equities and funds, meaning that baby boomers own 96% more in funds and equities than millennials.

Pension entitlements owned by baby boomers are worth $15.44 trillion compared to $2.41 trillion owned by millennials. Baby boomers’ private businesses are worth $6.26 trillion, while millennials’ private businesses are worth just 15% of that at $0.94 trillion.

Consumer durables owned by baby boomers are worth $2.41 trillion, while the consumer durables owned by millennials stack up to a value of $1.05 trillion.

Other assets owned by baby boomers are worth a total of $12.23 trillion, while millennials own $1.95 trillion worth of other assets.

Average wealth per generation over time

Here we look at the average wealth per generation historically. To get as accurate a view as possible, we have taken inflation rates in mind. We look at the average wealth the different generations had when they were in their 30s, 40s, and 50s.

30 years of age

If we compare Generation X and millennials, we can see that millennials are 23.7% worse off than Generation X in terms of wealth accumulated around the same age. By the time Generation X was in their 30s, they had an average wealth of $84,414 (inflation rates taken into consideration), while millennials had an average wealth of $64,412.

The average baby boomer had a wealth of $132,960 in their 30s, more than double the wealth of millennials around the same age.

40 years of age

When baby boomers were in their 40s, they had an average wealth of $195,994. Generation X in their 40s, had accumulated a wealth of $131,021 around the same age.

50 years of age

When the youngest of the silent generation reached their 50s in 1996, their average wealth was $292,210. Using historical inflation rates, that number is equivalent to a wealth of $495,057 in today’s value.

Baby boomers held an average wealth of $629,683 in their 50s, equivalent to $704,158 in today’s value.

Worse off is Generation X who, on average, owned $396,293 when they started reaching their 50s. This is 43.73% less than what Boomers had when they were the same age.

What does the future hold?

Baby boomers are considered the wealthiest generation in history but what happens when this wealth is passed on to younger generations?

A study from Coldwell Banker [5] Coldwell Banker - A Look at Wealth 2019: Millennial Millionaires - Accessed November 2021 https://blog.coldwellbankerluxury.com/a-look-at-wealth-millennial-millionaires/ estimates that millennials are expected to inherit over $68 trillion from their predecessors by 2030, meaning that in less than 10 years’ time they will have accumulated as much as five times the wealth they currently hold.

Methodology

The population data and wealth data for the silent generation, baby boomers, Generation X and millennials is derived from the Census (www.census.gov) and the Federal Reserve (www.federalreserve.gov). At the time the research was carried out, no data was availablefor Generation Z.

The inflation rates were calculated using SmartAsset’s inflation calculator (https://smartasset.com/investing/inflation-calculator)

Sources

• ^[1] Federal Reserve - Changes in U.S. Family Finances from 2016 to 2019: Evidence from the Survey of Consumer Finances - Accessed October 2021 https://www.federalreserve.gov/publications/files/scf20.pdf
• ^[2] The Fed - DFA: Distributional Financial Accounts - Accessed November 2021 https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/#quarter:119;series:Net%20worth;demographic:generation;population:all;units:shares
• ^[3] Census.gov, National Population by Characteristics: 2010-2020 - Accessed November 2021 https://www.census.gov/programs-surveys/popest/technical-documentation/research/evaluation-estimates/2020-evaluation-estimates/2010s-national-detail.html
• ^[4] Minnesota Reformer - Millennials are the largest workforce and the least wealthy — why? Accessed November 2021 https://minnesotareformer.com/2021/08/11/millennials-are-the-largest-workforce-and-the-least-wealthy-why-politics/
• ^[5] Coldwell Banker - A Look at Wealth 2019: Millennial Millionaires - Accessed November 2021 https://blog.coldwellbankerluxury.com/a-look-at-wealth-millennial-millionaires/