I bet you’ve heard the narrative many times before—millennials are the poorest generation ever. There’s no shortage of articles to support this either:
Unfortunately, articles like this tend to focus on the fact that Millennials own about 5% of all wealth, which is lower share than what prior generations owned around the same age. I don’t disagree with this, but it doesn’t paint the full picture. Because when you look across the standard wealth/income metrics, Millennials seem to be on (more or less) the same path as prior generations.
How Millennials Are Similar to Prior Generations
Using the same Federal Reserve data cited in the articles above, we can see that Millennials have roughly the same inflation-adjusted financial assets per capita as prior generations did around the same age. In the chart below I illustrate this by aligning the average age of each generation (as defined by the Federal Reserve) and then showing the inflation-adjusted financial assets after dividing by the number of households in each generation:
As you can see, Millennials seem to be accumulating financial assets at the same rate that GenX and Baby Boomers did. Of course, financial assets aren’t the only metric that matters, so let’s look at total net worth (assets – liabilities) as well.
Once again, after adjusting for inflation and the number of households in each generation, Millennials seem to be doing fine in terms of total net worth too:
Looking at this chart, Millennials seem to be on the same general path as GenX and Baby Boomers were on when they were at the same age. In fact, Millennial wealth seems to be approaching Baby Boomer wealth (at least on a per capita basis) given that the red line (Millennials) is reaching out to the blue line (Baby Boomers) like it’s going to touch it in a few short years.
It reminds me of that famous painting of Adam and God touching fingers:
Jokes aside, Millennial wealth seems to be on a similar trajectory as those generations that came before. For example, from Q4 2019 to Q4 2020 (during COVID!), Millennials added over $1 trillion in total net worth, which is a 20% growth rate in wealth.
If their wealth continues to compound at this rate for the next three years, they will easily surpass what Baby Boomers had at the same age. In fact Millennials only need a 13% growth rate in their per capita wealth over the next three years to match Baby Boomer per capita wealth at the same age. I don’t think this is unreasonable to beat either since GenX had a 22% annual growth rate in per capita wealth from ages 31-34 (the same average age as Millennials are now).
Photo by Mark König on Unsplash