The Real Reason America’s Wealth Gap Is Widening Between Generations
Over the last few decades, the wealth gap between generations in America has grown wider than ever. Older generations are sitting on piles of wealth, while younger people are struggling to make ends meet. The gap is mainly brought on by how different generations have accumulated wealth and how others are being left behind.
Boomers Are Winning the Wealth Game
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Boomers, those born roughly between 1946 and 1964, have garnered a staggering $82 trillion in wealth. That’s more than double the wealth of Generation X, and it’s four times what millennials have. A significant portion of this wealth stems from owning homes and investments that have experienced substantial value increases over time. For many boomers, homeownership was a massive contributor to their growing net worth.
On the other hand, many younger Americans simply can’t achieve homeownership. With home prices soaring, millennials are having a hard time getting into the market. And the mortgage debt for younger buyers is rising faster than their overall wealth. The weight of these financial burdens only makes it harder for them to keep up with the wealth of older generations.
Boomers have done well by investing in the stock market. They hold over half of the stocks in the U.S., worth more than $25 trillion. Meanwhile, millennials own just 8.2% of stocks, valued at $3.9 trillion. This difference shows how wealth has been distributed more unequally over time.
Older generations saw stock prices soar, thanks to the growth of retirement accounts like 401(k)s. Millennials, however, entered the market later and with less to invest, meaning they haven’t benefited similarly.
Generational Tension on the Rise
One of the biggest contributors to the widening wealth gap is the fact that boomers are holding on to their homes. They choose to “age in place,” so there’s a shortage of homes on the market for younger buyers. About 30% of large homes in the U.S. are owned by boomers whose children have moved out. This leaves millennials with fewer options for buying their first home.
Boomers aren’t just holding onto their homes, though; they’re sitting on some of the largest properties in the country. This keeps the supply of homes tight and keeps home prices high, further preventing millennials and Gen Z from entering the market.
As older Americans continue to benefit from home values, the stock market, and fewer financial worries, younger people are left behind, watching their wealth slip further out of reach. This wealth gap is a clear divide in opportunity. The real question is: How long can these trends continue before younger generations decide they need a change?