Oy... change in net worth by age group...

[Recursion]

Man, that's a kick in the teeth...

http://www.zerohedge.com/news/2013-12-17/change-us-net-worth-age-group

By now it is a well-known fact that the Fed's monetary policies over the past 5 years (and really ever since Greenspan unleashed the Great Moderation) have been very successful at one thing: transferring wealth from the US (and global) middle class and handing it over to the already wealthiest strata of society, either through financial repression, zero savings rates, or generally boosting financial asset values, which as we showed hit a record $63.9 trillion in Q3, or over 70% of total. However, just like the general public's attention is focused on the quantitative components of the monthly payroll number and completely ignores the qualitative gains or losses in the US labor force, so the broad definition of "middle class" leaves quite a bit to be desired. So what happens if one quantizes society instead of by class with wealth of income cutoff ranges but instead by age? In that case, one gets the following chart prepared by the Urban Institute showing the change in net worth in the period 1983-2010 by age group.

The discrepancy summarized:

Young adults’ ability to grow their personal assets over the past 30 years has decreased considerably. Average wealth for individuals in their 20s and 30s dropped 7 percent from 1983 to 2010, while those 74 and over have seen wealth increase by 149 percent in the same time period. Figure 7 highlights the substantial changes in net worth by age, showing that Millennials today are financially worse off than their parents were at the same age

It is meaningless to make ethical judgments based on the above chart, however the data does confirm one of the most troubling hurdles before any dreams of a virtuous economic recovery can be realized: because it is the younger age groups that drive household formation, and are responsible for the bulk of organic demand for homes - that so critical, missing variable in what would be a true housing recovery (instead of merely using houses as flippable hot potato assets whereby one investor sells homes to another investor with no intention of occupying, in the process making that entry-level home ever more unaffordable for the average young American).

And a question: in a society increasingly torn by conflicts (some of which as if created on purpose): by social status, by race, by ethnicity, by gender, and so many more, how long until one can add age as an ever growing source of social discontent?

[msongs]

1. a small fraction of the oldest age group has most of that wealth; the bulk of the older age

group is only modestly well off or worse than that I would bet

[Recursion]

2. Well, that doesn't mean 74+ year olds are richer than 24-37 year olds

That's change in net worth since 1983, and back then I bet seniors were pretty poor.

[hfojvt]

8. I don't see why seniors as a group

should be any poorer in 1983 than they are now. Logically being elderly has always been the best bet for accumulating wealth. The 20 year old is looking for a job, starting a career, saving money to make a down payment on a house. The 70 year old has already worked 30+ years and moved up the ladder (sometimes) and the house they bought 40 years ago has greatly appreciated in value.

Looking at the 2002 census of wealth, 58% of those over age 75 had over $100,000 in net worth, compared to just 12.2% of those under age 35. On the other side, 58% of those under 35 had less than $10,000 in net worth, compared to 16.8% of those over age 75.

[Ikonoklast]

14. Medical bankruptcies affected that demographic to a greater degree.

[1000words]

3. Are there numbers out there regarding the coming transfer of wealth

of Boomers to Gen-Xers?

If I'm not mistaken, it's a historically large group (Boomers) transferring to a historically small one (Xers.)

[Recursion]

4. Plenty of boomers have millenial kids, too

But then again if the Baby Boom ends up going into nursing homes, their kids won't get much of an inheritance, since Medicaid attaches to estates of people it's paying for the nursing care of.

[1000words]

5. Yes ... good points, all.

My understanding is far too many Boomers were unable to save/plan like their parents. It'd be interesting to see some figures.

[hfojvt]

10. There are actually more Xers than boomers

at least if you include 1961-64 in Generation X.

only 3.6 million babies were born in 1950, compared, for example to 4 million in 1964 and 3.7 million in 1970.

Looking at some of the definitions, if Generation X is only 15 years, from 1964-1979 then of course it is smaller than the Boomers for 19 years 1946-1964.

I prefer the standards use in the book "13th generation: abort, retry, ignore" where they make them all 20 years.

Boomers - 1941-1960
Xers - 1961-1980

But obviously these things are kinda arbitrary. Is my sister, born in 1960 really in a different generation than myself, born in 1962? And my brother, born in 1965?

We all sorta grew up together, although even between my brother and myself, for example, his last year of little league baseball was co-ed and mine just three years earlier was not. And probably I was more aware of Vietnam than he was.

[1000words]

16. Huh ... I didn't know that.

Thanks, hfojvt.

[SheilaT]

17. Actually, the authors of that book have

very specific reasons for dating the generations the way they do. If you get a chance, read Generations by the same authors where they go into very great detail about the generational types and why they set the dates they did. I have a cousin who was born in 1964 and she thinks of herself as a Boomer, but I can tell you, she's not. Her life experiences and her outlook and so on are very clearly that of a Gen Xer.

The dating generally has to do with what happens at specific timings in a generations passage through time. People who are one year on either side of a divide may well identify with the other generation, but for the vast majority of people those datings work. I found that the book Generations profoundly altered how I view lots of things out there.

I have been telling people here about that book for years now and you're the first poster who has ever referenced any of the books those two men wrote. They also wrote one called The Fourth Turning which is sort of an update or perhaps sequal to Generations.

[JDPriestly]

6. There is nothing shocking about this.

When the generation now in its 70s was in its 20s and 30s, it had absolutely nothing, maybe if they were married, they owned their wedding rings.

As time passed, they raised families and when they reached their 40s and 50s and their children were grown, they gradually began to save.

If they bought a house, the equity they hold in their house probably makes up a lot of their wealth.

The parents of the now 70-year-old generation had pensions from their workplaces. They, therefore did not hold their retirement cash as wealth in the bank. The 70-year-olds of today more rarely have pensions that are work related. Therefore their wealth is shown as belonging to them. In fact, they would have more money if they received good, fixed pensions as did many of their parents and as some public employees and union members still do.

The chart is misleading if not understood in the context of the normal accumulation of wealth over a person's lifetime.

If you look at income, you will find that the vast majority of Americans over 65 or should I say between 65 and 75 have very low monthly income -- about the same as minimum wage. And that is after a lifetime of working. Many, many Americans rely on Social Security as their only monthly income in retirement.

"The average monthly Social Security benefit for a retired worker was about $1,230 at the beginning of 2012. This amount changes monthly based upon the total amount of all benefits paid and the total number of people receiving benefits."

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/13/~/average-monthly-social-security-benefit-for-a-retired-worker

Is the average senior after a lifetime of saving and working likely to have more savings or wealth than his 30-year-old son who entered the workforce six years ago and has two children? Yes. Hopefully.

Do the son and the son's wife probably have a higher monthly income than their parents? Also yes.

So don't draw too many conclusions from that chart without thinking about the context, the social context.

A young person with a degree has a lifetime in which to accumulate wealth. Can he indulge every whim? Should he maybe wait to buy that I-Phone and save his money instead? Yes. His parents certainly did not have an I-Phone at his age.

We should work together to improve our economy. That is mostly the job of young people who can still work. The reason that older people retire is that they begin to have movement and other health problems that make the less desirable than the young in most jobs.

[SheilaT]

7. Exactly. I am now 65.

So in 2010 I was 62. In 1983 I was 35. I was in the middle of my life. I had one child. A second one came along in 1987. My life, my circumstances change from year to year.

This is a bit misleading, to say the very least.

[JDPriestly]

9. I think that today's seniors are worse off than their parents. By far.

[SheilaT]

12. That may not necessarily be true.

You'd have to look at the specifics.

My father died at age 60, so he didn't get to live in retirement.

My mother retired in 1982 at 65. She lived on social security and a very small private pension. Her needs and wants were very modist, and so she was quite content in retirement. She died in 1999, at age 82.

I am currently struggling with my own retirement decision. If I remain working until age 70 (I'm currently 65) I would have more money, both in social security and from my own savings. But I'd love to leave work much sooner. I can actually afford to do that now, but at a sacrifice of future income. So what to do? It's a very personal decision.

On the other hand, I used to read old Life Magazines, and among the many things I learned was that the older generation, meaning the ones who are called "The Greatest Generation" (and you probably don't want to hear what I think of that name) benefitted enormously from the constraints of WWII. To begin with, there were the restrictions of the Depression. Lots of people were out of work. However, there were things like the CCC (Civilian Conservation Corps) that gave young people, men mostly, jobs.

But lets get back to WWII. What stood out clearly from the old Life magazines was that the young adults of that era benefitted enormously. Yes, there were enforced savings. You simply couldn't buy many consumer goods, even though you were promised that once the war was over you'd be able to -- things like televisions, sheets, and refrigerators. But there were also greatly increased wages. For everyone. Among the things I learned from reading Life was that African Americans suddenly had job opportunities that could never have dreamed of before. When white men went off to war, their jobs had to be filled. Suddenly employers weren't so concerned about the skin color of the replacements. The (African American) servant class essentially disappeared. In the 1930's, any sort of middle class household could afford and did employe Negro servants. Now those Negros (African Americans) could get better jobs. And they took those better jobs.

Something else I learned from the old Life magazines. The rise of credit purchasing has long been laid at the feet of the boomer generation. Ha! It is very clear from Life that it was the parental generation, the GI generation, that cheerfully undertook debt to finance the good life and their futures.

While I'm talking about what I learned from reading old Life's, and if you have the chance to do so you absolutely must, because you will learn even more from the advertizements than from the articles (although I'll happily go on and on about either) instead of spending hours and hours (I spent three or four hours a couple of times a week for three years reading the Life magazine) you can more quickly and efficiently learn a lot of this by reading Generations by William Strauss and Neil Howe. Even though their stuff is quite unlike what I've just nattered on about, it is the single most influential book I have ever read. I am constantly extolling it here on DU, and so far as I can tell no one else here has ever read it. Please, please, read this book. It will alter forever how you see many things, especially how you view political events.

[JDPriestly]

15. Thanks. My parents' generation was a wonderful generation, but they were able to pay for their

own homes, enjoy the comfort of just one adult in the home working (leaving the other to bake cookies or volunteer or spend lots of time with the children) and ended up with better pensions than their baby-boomer generation.

The "Greatest Generation" had a tough time during the depression.

But the Baby Boomers were such a huge generation. Because of their sheer numbers, they always had to do with less of the things that mattered like less space in their homes, less attention from teachers. Our country enjoyed a boom in the production of material things. The Greatest Generation treated the environment as though it was inexhaustible. They really didn't know any better. The Baby Boomers get blamed for the environmental devastation, but their parents made a lot of the decisions that have gotten us where we are with regard to bad air and water, etc.

I love my parents, but I see the mistakes of their generation very clearly. After the Depression and WWII, they did feel entitled. I don't think that the baby boomers do. A small percentage of Baby Boomers feel that way. After WWII there was a euphoria about our being the wealthiest country, the best, etc. on earth. The Greatest Generation lost perspective in their zeal to get and grab.

I'm probably being too harsh, but even now, that generation older than 75 is very skeptical about global warming, etc. They have had every advantage because they raised the huge baby boomer generation that provided a lot of prosperity prior to Reagan.

Let's don't forget that the oil crises of the 1970s -- both under Nixon in 1973-74 and Carter later on -- set back our economy, seriously set back the prosperity we had enjoyed. Those crises were great for our environment, but when the first one happened, I had a front row seat working in an oil company. We have never recovered, never adjusted, never moved to energy that would give us true independence, not even now, although we claim to be energy-independent.

[JHB]

11. How does that chart stack up against similar periods in the past?

That would be the indicator of change, not the chart itself

[KentuckyWoman]

13. This is totally meaningless

There are not enough parameters set.

Obviously the under 40 group is having a tough time of generally. Yes the end of life group now generally have it a little easier than the ones coming up behind them. But I don't believe everyone but the youngest is way better off now than the same age group in the 70's or 80's. All but the top 10% of wage earners has been steadily losing ground since Reagan.