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Can the young catch up?

By Judy Martel · Bankrate.com
Tuesday, November 8, 2011
Posted: 5 pm ET

Households headed by a person age 65 or older have a net worth 47 times greater than households headed by someone under 35, the widest wealth gap between young and old on record.

According to U.S. Census data, the wealth gap between these two groups is double what it was in 2005 and almost five times what it was 25 years ago. Net worth measures all assets, such as investments, cash, home equity, cars and other property, minus any debt like credit cards, car loans and mortgages.

So while it's natural that older generations would have more time to accumulate assets and reduce debt, economists say this recession has hurt the younger generations more, especially as they take on loans for additional education and are possibly underwater in their mortgages.

An  article in the Wall Street Journal points out that unemployment is worse for young men in particular, at 14.4 percent, up from 6 percent four years ago. That compares with a national unemployment rate of 9 percent.

Other reasons for the disparity are the precipitous drop in housing values. A home is typically the main asset of young people, and, according to an article in the Associated Press, their housing wealth dropped 31 percent from 1984, while older Americans, who likely bought their home before the housing boom, saw a 57 percent gain, even after the housing bust.

Older Americans are also staying in their jobs longer and since 1967 have seen their median income grow four times faster than the under-35 age group.

As a result, some are charging Congress with reducing money that is supporting benefits for older people, such as Social Security and Medicare, and reallocating it toward programs that will help the younger generation. What do you think of that idea?

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4 Comments
Randy
November 10, 2011 at 10:58 am

Simple solution - Take money from the old folks and give it to the young people.

Wolverine
November 09, 2011 at 9:08 am

And repeat the mistakes that the US has done with the Boomers?

No.

It has to stop somewhere. I'm sorry that the generation before the young generation sold the "American Dream" and that they fell for it... but it has to stop somewhere. Yes, it's a raw hand... and a bad one. It sucks that they suffer for the mistakes of those before them, but if it doesn't stop... it'll just continue on that vicious cycle.

I've been there, and I've seen it happen...

"You have to graduate H.S, go onto college, graduate, get a career, get married, buy a house, have kids... and you'll be happy and successful".

The same spoon-fed lie that a lot of us got, but I was smart enough to see the writing on the wall and avoided some of those steps, specially the part of buying a house.

What a lot of people fail to mention though is that this younger generation was obviously raised by SOMEONE, so they're only repeating the steps taught to them. The way of doing it right 20 - 30 years ago obviously isn't working now, but you don't see any parents telling their kids that, now do you?

We still tell our children that they must become respectable professions at the best institutions if they want to make money, but we never tell them how much it's going to cost them once they're done. Student debt and housing debt alone can cripple anyone and a lot of them are underwater by both by the age of 30.

Tyson
November 09, 2011 at 8:13 am

This is rediculous! The young generation the author discusses is asking for a handout. For starters, buy only a house you can afford. Take out loans that you can only pay back. When is the idea of personal responsibility going to make a comeback? My family makes it on 60k a year as well. We don't inviest much now, but after doing the Ramsey baby steps, we will be able to invest a lot in about three years. STOP buying high priced cars on credit and STOP financing your lifestyle. If more people would live within their means, the world would be a lot better place.

Mike
November 08, 2011 at 7:29 pm

I am sure the young people who want the help now will want it again when they are older. I am not sure that government help is actually helping. I have had employees who will not be able to work extra hours,maybe because state benefits get reduced??? I don't know for sure but it sure seems funny sometimes. My family makes it on 60K per year and I am investing plenty so I don't have to rely on the government. Maybe more people should try taking care of themselves and quit waiting for the government to take care of them. It doesn't seem like they can take care of anything now except padding their own retirements and lining there own pockets anyway. What they are doing is doing more harm than good.

Just my thought