There’s a growing generational wealth gap in America

Over recent decades, Americans have come to expect constantly rising prices on houses, stocks, and other financial assets. But those positive gains are heavily concentrated with older Americans, who invested years ago when prices were lower, resulting in a growing generational wealth gap.

By the numbers: Three decades ago, Americans aged 55+ owned roughly half of all US households’ combined $3 trillion in wealth (51%).

• That share has increased steadily over the following years, reaching ~70% ownership of a combined $166 trillion in US household wealth at the end of last year.
• At the same time, working-age adults have seen their share of America’s wealth steadily shrink. Households under 40 currently own 9% of overall US wealth, down from 14% three decades ago, while Americans aged 40-54 have seen their share of assets fall from ~40% in 2001 to less than 25% currently.

A large portion of the wealth gap can be attributed to real estate. This asset class, which is the largest source of wealth among US households, has driven much of the generational divide. Younger generations have seen homeownership become increasingly inaccessible – with affordability falling last year to its lowest level since 1985 – while many older Americans, who own the bulk of home equity, have benefitted from this trend.

• The generational wealth gap has also grown pronounced in the stock market, where those aged 55+ currently hold 80% of the $40 trillion owned by US households – up from a 60% share in the early 2000s.

👀 Looking ahead… Until housing demand slows, supply increases, or the Fed cuts interest rates significantly, experts say the generational wealth gap will continue to increase.

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Editor’s note: There aren’t any op/eds today due to a lack of available coverage.