Younger generations are poorer than their parents and are running out of time to get rich — here are 3 simple ways to build wealth more quickly – Yahoo Finance
An entire generation may have missed out on economic opportunities that their predecessors enjoyed, according to analysis from The Federal Reserve Bank of St. Louis. The report seems to suggest that millennials (those between the age of 26 and 40) are likely to have less wealth than their parents did at the same age.
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The Federal Reserve went as far as calling older millennials (those born in the 1980s) a “lost generation.”
Although the gap has narrowed since the pandemic and the St. Louis Fed’s original report in 2018, more recent analysis shows millennials have yet to catch up.
Here’s a closer look at why this generational economic gap has emerged and how you can avoid this demographic curse by building wealth more quickly.
Why younger generations are poorer
According to recent Federal Reserve data, millennials collectively control about 6.6% of the total household wealth in the United States in 2022. Baby boomers control 50.4% — far more than any other cohort.
Studying past wealth cycles, the St. Louis Fed report found that those born in the 1980s had 34% less wealth than their parents did at the same age. This is concerning because “asset appreciation is unlikely to be as rapid in the near future as it was during the recent period,” according to the report.
Lack of affordability and economic crises appear to be the primary reasons for this wealth gap. Millennials entered the job market right after the 2008 financial crisis, which significantly impacted their lifetime earning power.
Meanwhile, assets like real estate have become unaffordable for millennials, preventing them from building wealth the same way their parents did.
That being said, this generational curse isn’t unavoidable. Everyone’s wealth-building journey is unique and there are ways to accumulate assets faster than your peers and parents. Here are three easy steps to help you boost your pace of wealth creation.
1. Boost your income
Millennials may have less wealth, but they’re earning more than their parents, according to economic blogger Kevin Drum, based on his analysis of U.S. Census Data.
Drum looked at the median household income of people aged 34 to 44 and adjusted it for inflation. He found that millennial households earned on average $85,000. Baby boomers, meanwhile, earned just $70,000 at the same age.
This trend is likely driven by the fact that studies show millennials are often better educated, are more likely to live in dual-income households and are more likely to have multiple sources of income. That means you can accumulate wealth faster than your …….