The wealthy in the United States are getting far wealthier, and the poor are getting far poorer by comparison, but who, exactly, falls into those two categories of rich and nowhere-near rich? Something interesting happens when you look at people’s age.
Today, older people are much better off financially than older people a quarter century ago. And younger and middle-aged families are faring worse, found researchers at the St. Louis Fed’s Center for Household Financial Stability. Their paper adds to a growing body of research on the subject.
It’s normal for people to accrue more wealth as they age. They earn and save more, and they tend to pay their bills on time. Likewise, younger people are more likely to have debt that makes it more difficult to invest, and they earn smaller paychecks.
But there’s a marked difference between the generations. The median wealth of older families (headed by someone at least 62) increased 40 percent between 1989 and 2013, from $150,000 to about $210,000, the center found.
Meanwhile, the wealth of middle-aged families (ages 40 to 61) decreased 31 percent, from $154,000 to about $106,000. And the median wealth of young families (under 40) decreased more than 28 percent, from $20,000 to just over $14,000. The numbers are adjusted for inflation and other factors.
It’s difficult to say why the generations are getting poorer. It’s certainly not because of education. Today’s young families are better educated than any previous group of young people.
The analysts posit that part of the reason why younger families are losing ground is because they’re more diverse. “[W]e know that race- and ethnicity-based disadvantages continue to loom large in our society,” they wrote.
It could also be a numbers game. The baby boomers could be faring worse than the so-called silent generation (born 1925-1944) because there are so many of them, and they had to compete for jobs and other opportunities.
The silent generation, meanwhile, is small — because birth rates declined during the Great Depression — which benefited them in the post-World War II economic boom, the analysts wrote.
Learn more in the video above.
