Millennials financially outperform Generation X and boomers at the same age, says study

Those (born 1984 to 1995) are often seen as facing more difficult financial challenges compared to their Generation X predecessors (born 1964 to 1983) and those (born 1947 to 1963) dealing with the rising cost of living , the consequences of the 2008 financial crisis and the impact of COVID-19. However, a new analysis of data from the U.S. Bureau of Labor Statistics and the Federal Reserve challenges that narrative.

A study by the website LendingTree shows that Americans aged between 26 and 41 in 2022 had an average net worth of US$84,941 (about R$484 thousand) — 8.4% higher than that of Generation X at the same age in 2007 and 46% higher than in 1989, after adjustments for inflation.

In terms of assets, 99.3% of owned assets (cash, property or investments) in 2021, compared to 97.5% of Gen Xers and 93.8% of boomers in similar life stages.

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Median assets were valued at US$219,200 (R$1.24 million), close to the US$246,991 (R$1.40 million) of Generation based on Federal Reserve data.

Despite higher expenses — US$67,883 (R$387 thousand) annually compared to US$63,761 (R$363,501) — expenses represent a smaller portion of their income. In 2021, Americans spent 75.8% of their gross income, compared to 83.2% for Gen X and 91% for boomers, signaling a more conservative financial approach.

“Scars of the Great Recession and the pandemic”

The combination of sizable assets and high net worth tells Matt Schulz, chief credit analyst at LendingTree, a lot about how they view their financial health: “I believe the scars of the Great Recession and the pandemic have helped shape people’s views on money , forcing them to focus more on their finances than other generations have needed to do.

“This focus led them to learn more about money, start investing and saving sooner, become more entrepreneurial, and make other financial moves that helped set them up for success. It certainly helped that we saw shares reach all-time highs.”

The author of the book “Ask Questions, Save Money, Make More” continued: “(People) try to save when they can. They try to invest when they can. They are not spending a lot of money on frivolous things to impress their friends.

“Unfortunately, some of this is driven by fear. Many have lost jobs several times over the years and haven’t forgotten. They want to do everything they can to protect themselves if this happens again.”

Ready for the “Great Wealth Transfer”

Economists cannot reach a consensus on whether they can expect their wealth to grow further due to the so-called “Great Wealth Transfer”.

According to real estate broker Knight Frank’s 2024 Wealth Report, released earlier this year, over the next 20 years, US$90 trillion (R$513 trillion) in assets will be transferred between generations in the US alone.

According to Knight Frank, this change will make the affluent “the richest generation in history”.

However, expectations of a big gain for the—a seemingly independent and relatively affluent generation—may have been exaggerated.

That’s because Gen Xers aren’t really planning to transfer all of their assets to their younger relatives, but rather use the wealth to live on as the population ages.

A Northwestern Mutual Harris Poll survey of more than 4,500 U.S. adults this summer found that while 32% of millennials and 38% of Gen Z (born between 1995 and 2009) are counting on inheritances, just 22% of Gen preparing to leave an inheritance.