Contrary to widespread belief, millennials are earning a very reasonable amount of money, making more than any other generation did at their age.
Let’s take a look at how this is effecting the generational wealth gap overall as it does nonetheless also seem to be the case that millennials are a lot less wealthy than they could have been, due to having faced one economic misfortune after another. The most recent being the affordability crisis where the cost-of-living is outpacing wage increases. Costs of certain things such as childcare fees have skyrocketed over the past couple of decades. Exceeding what people can now reasonably afford. As has the price of real estate, student loan debt, rental costs, and care for elderly family members.
In addition to this, millennials have also seen two recessions before the age of 40. When millennials were first entering the workforce, the Great Recession was at its peak, making it immensely difficult to find a job. And ever since the millennials joined the workforce, wages have not kept up with the cost of living.
In a recent PayScale Index, it was found that since 2006 in the US, wages have increased by 19% however when accounting for inflation, what you really get from those wages has in fact declined by almost 9%. This drop in purchasing power is especially problematic for the millennial generation after battling around obstacle and dilemma financially.
The generational wealth gap continues to appear bleak. As a whole, millennials (born between 1981 and 1996) only hold 3% of wealth in the United States. When the baby boomers (born between 1946 and 1964) were of a similar age as millennials are now, they owned about 21% of America’s wealth. A shockingly low percentage from the millennial’s when taking into consideration that they are also a larger group than the baby boomers.
Living paycheck to paycheck sometimes gives the overtone of barely scraping by when in reality the current situation is much more complex. Older millennials had gained serious ground in building wealth before the pandemic which affected everyone financially, and their wealth levels are still below where they should be now.
Inflation is also taking its toll on retirement savings, when millennials come to retirement age, they will need significantly more than the baby boomers entering pension age now or the remainder of the Silent Generation (born between 1928 to 1945) who are currently in retirement.
However, it is not all unwelcome news for millennials, as it is expected that they will likely catch up financially due to their good saving habits, employment rates and baby-boomer inheritance.
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