Millennials closing the generational wealth gap

Armed with new data and new methodology, researchers at the Federal Reserve Bank of St. Louis revisited earlier findings on the generational wealth gap and found that “millennials may not be as ‘lost’ as we once thought.” The researchers analyzed data to calculate an estimated life cycle of wealth, mapping out the general path that wealth accumulation tends to follow, with low levels among young families, accumulated savings as people age, and drawdowns in retirement. While older millennials (defined as those born in the 1980s) were still 11 percent below wealth expectations in 2019, the researchers said this represented “significant progress from a 40 percent deficit in 2016.”

A note of pessimism was sounded from the authors who found that despite the gains among older millennials’ median wealth, with the oldest among them entering their 40s, “there is less time to catch up and take advantage of wealth-building avenues.” That cohort also shoulders “more debt as a share of income than we would have expected,” the authors said. They also caution that these findings do not capture the effects of the COVID-19 recession, which could mean more difficulties for millennials, especially those who suffered job or income loss.

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