Lagging Wealth For the Younger Generation

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  • Mellody Hobson talks about young people and wealth on today’s “Money Mondays” segment.

    I hate to be the bearer of bad news, but the Urban Institute just released a new study about wealth building and younger generations, and the findings show that Gen X and Gen Y Americans have accumulated 7% less wealth than their parents did at that age over 25 years ago.

    Hasn’t the average wealth of Americans doubled over that same period of time?

    That’s true, and the American dream of working hard, building wealth, and saving more than one’s parents has held true…unless you’re under 40. It makes sense if you remember that wealth compounds over long periods of time, which is where young people are at a relative disadvantage. Less time saving means less compounding, and a lower bottom line.

    But how do you account for the discrepancy that their parents had saved more by the same age?

    It’s a number of factors that are greatly out of the individual’s control: Stagnant wages, fewer job opportunities and lowered home values among them.

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