Wealth gap between young and old is wider than ever
Wealth gap between the young and old is deeper than it has ever been. The recession hasn't helped, but the wealth gap has been growing for years.
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Of course, it's common for young households to have smaller net worth than older ones, because young families are just getting started in careers and saving, investing, or buying homes.Skip to next paragraph
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But the Pew report found a big widening of the traditional gap.
Households headed by someone under 35 had median net worth (assets minus liabilities) of $3,662 in 2009, down from $11,521 in 1984. Back then the typical senior household had 10 times the net worth of those young households. By 2009, that senior household had 47 times the net worth of the younger household.
Housing trends have played a major role in the growing gap.
Had it not been for home equity, the median net worth of senior households would have fallen (by 33 percent) rather than risen (by 42 percent) over the past quarter century, the Pew researchers said.
But, although gains in home equity have helped the oldest Americans, homeownership hasn't helped younger generations – many of whom bought homes during the past decade only to see their values fall as the recession struck.
At the same time, young households are less likely to be homeowners at all, mitigating the harsh impact of the housing bust. For the young households, the decline in net worth would have been just as steep, since 1984, even if home equity is left out of the picture.
Although student debts explain part of the net-worth downshift, that doesn't mean that college educations are a waste. Unemployment is currently much higher for less-educated Americans than for those with college degrees, and college typically means significantly higher income over the course of a lifetime.
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