Older Americans are 47 times richer than young
According to analysis by the Pew Research Center released Monday, older Americans are now 47 times richer than the younger generation, marking the largest wealth gap ever recorded between the two age groups, CNN reports.
While it’s typical for older generations to hold more wealth than younger ones who’ve had less time to save, the gap between the two age groups has widened rapidly. In 1984, households headed by people age 65 and older were worth just 10 times the median net worth of households headed by people 35 and younger. The analysis reflects the impact of the economic downturn, which has hit young adults particularly hard.
More are pursuing college or advanced degrees, taking on debt as they wait for the job market to recover. Others are strug-gling to pay mortgage costs on homes now worth less than when they were bought in the housing boom. Some have started to wonder if the government should partially reallocate the retirees health care resources to the young adults who are hurting more than them. The net worth of older households is $170,494, comparing to the younger age group figure of $3,662.
As a result, the median income of older-age households since 1967 has grown at four times the rate of those headed by the under-35 age group. The retirement benefits, which are indexed for inflation, have been a consistent source of income even as safety-net benefits for other groups such as low-income students have failed to keep up with rising costs or begun to fray.
Household wealth is the sum of all assets (house, car, savings account, 401(k) account, etc.) minus the sum of all debts (home mortgages, car loan, student loan, credit card debt, etc.) of everyone living in the household. Some of the main drivers of the divergent wealth trends are:
* Housing-market collapse of 2006
* Economic recession of 2007-2009
* Slow jobless recovery
* Delay in entering the labor markets for young adults
* Delays in marriage
* College loans
* Single-parenting
“We don’t know how the story ends, but we know how the story is beginning,” said Paul Taylor, executive vice president of the Pew Research Center. “At the beginning, today’s young people are not doing better than yesterday’s young adults.”
“If this pattern continues, it will call into question one of the most basic tenets of the American Dream – the idea that each generation does better than the one that came before,” he said.
Today’s young adults also start out in life more burdened by college loans comparing to their same-aged peers decades ago. In the mean time, college education has been found to be a great long-term financial pay-off, and the number of colleges has been growing.
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