“When I was your age, I already owned a home, a car, and had no student debt. What are you doing wrong?” I am willing to bet that a good chunk of Millennials have heard something along those lines from a member of an older generation such as Gen X and Baby Boomers. Well, despite being the largest generation in the workforce and in the country today, we make a great deal less and hold a lot less wealth than the older generations did at the same age.
Wealth is defined as the measure of one’s assets (what they own) less their debts (what they owe). The generational wealth gap has been a hot topic among Millennials for a few years now and as a result, there have been many studies done to determine just how big that gap really is. When the Baby Boomers were in their 30s, they collectively held a little over 21% of the nation’s wealth. The youngest Millennials are all nearing their 30s now and collectively hold less than 4% of the nation’s wealth today. That is a pretty big difference.
I also looked into the average wage earned by Baby Boomers in their 30s. The number on paper isn’t too far off from what Millennials are earning today, so you might think, “what is the problem then?” The actual break down of the value of the dollar is the problem. The average hourly wage for Baby Boomers in 1984 was $18.99 and today the average for Millennials is $19.32 only a $0.33 difference. However, you have to look at what the value of $18.99 in 1984 would be in 2021. That number is around $48, so that means that Baby Boomers made almost 40% more in their 30s than Millennials. Imagine what living off of $40,180.60 today versus living off of a little less than $98,000 a year would be like. The quality of life is vastly different.
Millennials are savings far less, if anything, for retirement and have far less assets than the older generations had at this age. This is because the cost of living is increasing much faster than what we are being paid. This is how the gap has grown to be so large. Millennials, and even Gen X, are not on track to hold has much wealth as Baby Boomers do when they are near retirement age. Speaking from experience, it can be hard to find a budget that works for the quality of life you want while still preparing for the future, but it helps to talk to a CERTIFIED FINANCIAL PLANNER™ to find a system that is right for you.
This is just the tip of the iceberg. There is a lot more to the generational wealth gap when you really investigate it, including trickle down economics, so if you are looking for some light reading then I encourage you to dive in. I also believe that we have a long way to go before we bridge this gap. Until then, the next time someone starts a money discussion with, “when I was your age,” you have a couple of talking points to get by.
- American Progress: “When I Was Your Age”
- Pew Research: Labor Force by Generation
- Business Insider: Millennials v Boomers Wealth Gap