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Millennials, often characterized as financially struggling, have been the subject of numerous debates and discussions about their economic prospects. However, as this generation enters their 30s and 40s, it’s time to rethink the lens through which we view this dynamic generation and recognize the progress they have made and will continue to make as they forge their path toward economic success and prosperity.

The Federal Reserve’s Survey of Consumer Finances has been used in numerous attempts to measure the wealth of different generations. One way to present the data is to show that when Baby Boomers were in their mid-30s, they held over 20% of national wealth, whereas Millennials, at a comparable age, hold only around 6% of national wealth. This perspective is graphically depicted below.

Graph of generational wealth for millennials

This seems like a huge disparity, but when Boomers were young, they made up a much larger share of the population compared to older generations of their time. To offer some perspective, it wasn’t until 2019 that Millennials overtook Baby Boomers as the largest generation in America. [1]

Now, let’s take a look at the data from the Federal Reserve in per capita terms.

Graph of generational wealth per capita

Data Sources:

  1. The Fed – Comparison: Compare Wealth Components across Groups (federalreserve.gov)
  2. International Database (census.gov)
  3. S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers: All Items in U.S. City Average [CPIAUCSL], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CPIAUCSL, August 15, 2023.

If you look at wealth on a per-capita basis, it shows an entirely different outlook. Baby Boomers were a much larger percentage of the population in their 30s, so looking at total wealth instead of per-capita wealth distorts this view. In fact, per-capita wealth for all three generations is incredibly similar as they progress through their adult years. The average Millennial is as wealthy as the average Boomer at a comparable age, and the typical Gen Xer is even wealthier now than the typical Boomer at the same life stage. Millennials appear to be tracking the wealth accumulation of Gen X almost exactly. If this trend persists, by the time Millennials reach their late 40s, they will also exceed the level of wealth held by Boomers at the same age.

Visual data comparing education, student debt, and future wealth of various generations

Source: “Millennial life: How young adulthood today compares with prior generations.” Pew Research Center, Washington, D.C. (February 14, 2019) How Millennials compare with prior generations | Pew Research Center.

Millennials are the most educated generation to date. This means that they have even greater human capital which should translate into higher earnings than previous generations.

At the same time, they have the highest student debt burden of any previous generation. According to a study from the Federal Reserve Board, 20% of Generation X members carried a student loan balance in 2004 compared to more than 33 percent of Millennials in 2017. Average student loan balances for Millennials in 2017 were more than double the average balance for Generation X in 2004. [2]

It is important to recognize that student debt may understate assets, leading to short-term challenges, such as difficulties in saving for a down payment on a house. However, as Millennials pay off their student loans and begin to realize the earning potential that accompanies a college degree, we may see Millennial wealth trending higher than Gen X by their late 40s.

Homeownership Among Millennials

Even though Millennials have encountered economic challenges that hindered their ability to buy homes, homeownership rates among Millennials are comparable to those of previous generations at similar ages.

Chart of generational homeownership rates by age

One significant factor impacting millennial homeownership rates is the timing of their coming of age during the Great Recession in 2008. This challenging economic period coincided with their early careers and savings efforts, limiting their earnings, overall wealth, and ability to buy homes for many years afterward.

However, in recent years, Millennials began gaining homebuying momentum, steadily narrowing the gap with older generations. From 2014-2021, they have been the largest cohort of homebuyers. In the wake of the steep rise in rates and subsequent affordability challenges, the progression of millennial home purchasing faced a slowdown in 2022, causing them to relinquish their position as the largest cohort of buyers. [3] Regardless of the short-term pullback in home purchases, Millennials are progressively bridging the gap in homeownership with their older counterparts.

Chart on share of homebuyers by generation

During the pandemic, many Millennials capitalized on historically low mortgage rates in late 2020 to purchase homes before prices skyrocketed, but there are also those who missed out. Over the following two years, median home prices shot up more than 30%, while mortgage rates rose from under 3% at the end of 2020 to above 6% at the end of 2022. [4] The Millennials that don’t own homes now face a challenging road ahead when entering the housing market.

At 40 years old, 62% of these older Millennials owned homes in 2022, compared to 64% of Gen Xers and 69% of baby boomers when they reached the same age. While Millennials still trail slightly behind older generations, the difference is hardly deserving of headlines or social media attention.

Millennials stand to benefit from the Greatest Wealth Transfer in History

The era of wealth transfer is upon us, and Millennials stand to inherit a substantial portion of the projected $84 trillion that will be passed down to both Millennial and Gen X heirs from older Americans in the next two decades. At present, the Baby Boomer generation holds half of the nation’s $140 trillion in wealth. [5]

Chart on generational wealth split depicting how baby boomers hold more than half of the nation's wealth

This transfer presents an opportunity for Millennials to bolster their financial well-being and enhance economic mobility. In today’s world, heirs no longer need to wait for their elders to pass away to benefit from family wealth. The concept of “giving while living” has gained popularity. This trend is not just a future possibility; it’s already a present-day reality. The implications are far-reaching, impacting the broader economy by facilitating social mobility for some while presenting obstacles for those left behind due to the soaring cost of living, housing, and raising families.

So, how are Millennials really doing? While they undoubtedly face their share of challenges, from wealth accumulation to educational attainment, the data we’ve explored reveals a more nuanced picture. Per capita analysis uncovers a wealth trajectory comparable to previous generations, fueled by higher education and earning potential. Homeownership rates, though impacted by economic challenges, continue to inch closer to parity with older generations. One of the greatest wealth transfers in history is on the horizon, presenting Millennials with a significant opportunity as they prepare to inherit a substantial amount of wealth from older Americans. Beyond the conventional portrayal of financial struggle, this generation on the cusp of middle age exudes promise and resilience, poised to reshape the future economy.

Written by: Linda Wang, Condor Capital Wealth Management

  1. “Millennials overtake Baby Boomers as America’s largest generation.” Pew Research Center, Washington, D.C. (April 28, 2020) https://www.pewresearch.org/short-reads/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/.
  2. Kurz, Christopher, Geng Li, and Daniel J. Vine (2018). “Are Millennials Different?,” Finance and Economics Discussion Series 2018-080. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2018.080.
  3. National Association of Realtors. (2017, March 7). Home buyers and sellers generational trends. www.nar.realtor. https://www.nar.realtor/research-and-statistics/research-reports/home-buyer-and-seller-generational-trends
  4. Dana Anderson, S. B. (2023, April 21). The race to homeownership: Gen Z tracking ahead of their parents’ generation, millennials tracking behind. Redfin Real Estate News. https://www.redfin.com/news/gen-z-millennial-homeownership-rate-home-purchases/
  5. Smith, T. J., & Russell, K. (2023, May 14). The Greatest Wealth Transfer in history is here, with familiar (rich) winners. The New York Times. https://www.nytimes.com/2023/05/14/business/economy/wealth-generations.html

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