The wealth gap between young and old people

The biggest problem with this article is that the data in their core graph[1] doesn&#x27;t actually match up with their claims.<p>What that graph shows is what families were worth over a 14 year periods for a bunch of cohorts. And the data makes... a pretty smooth graph. There&#x27;s lots of overlap and no obvious discontinuities, and no reason at all to think that there&#x27;s any change in trend over time.<p>The only apparent effect that even possibly shows that younger people are worse off comes in the last two data points of each young person&#x27;s line. But that&#x27;s a totally obvious artifact, because that&#x27;s the 2008 recession, which was the worst event of the 1989-2013 period graphed. (The 2000 dot-com bust was not nearly as huge.) EVERYONE&#x27;S line goes down at that time, including the oldest cohorts.<p>If the graph had more data, and showed what the 1901 cohort were like at age 31 (in the throes of the Great Depression), it would almost certainly be obvious that those 2008-driven dips aren&#x27;t especially bad, comparatively. And yet, that&#x27;s the old-person generation that is supposed to be the envy of the young.<p>This is just terrible interpretation of some unsurprising data.<p>[1] <a href="https:&#x2F;&#x2F;img.washingtonpost.com&#x2F;wp-apps&#x2F;imrs.php?src=https:&#x2F;&#x2F;img.washingtonpost.com&#x2F;blogs&#x2F;wonkblog&#x2F;files&#x2F;2015&#x2F;07&#x2F;whoa2.png&amp;w=1484" rel="nofollow">https:&#x2F;&#x2F;img.washingtonpost.com&#x2F;wp-apps&#x2F;imrs.php?src=https:&#x2F;&#x2F;...</a>

Speaking only for myself and my parents - the factor here has been land. They both inherited several hundred acres of farm and ranch land, and purchased some land in-town when it was (inflation adjusted) $90,000, and is now in the $2-3 million range.<p>They&#x27;re both terrible at saving, their combined income was never over 50% of what I&#x27;m currently making, yet they have both been retired and comfortably living off these &quot;investments&quot; for 20+ years now.<p>I, on the other hand, am just hoping that I can move to part-time work somewhere in my 60&#x27;s. I&#x27;m hopeful, but it means keeping my current income levels for another 20 or so years, and avoiding any major health or other emergencies.

There is a huge generational disconnect between the boomer-driven media and political establishments and the X&#x27;ers and millenials.<p>My prediction&#x2F;hope is that the stereotype of millenials as relatively happy socialites will end up reversing, with them falling in with us burn-it-to-the-ground X&#x27;ers once they are old enough to realize how screwed they are.

A couple of factors that play into this over the last 100 years: The prevalence of credit cards that increase the amount of depreciating goods young people can buy, and the long-term power of 401(k) investing.<p>Expanded consumer credit, and it&#x27;s appurtenant high interest rate cost, would tend to keep young people less wealthy towards the last half of last century. As credit card debt skyrocketed, savings rates plummeted from almost 11% in 1982, to 1.5% in 2007 [0].<p>Similarly, the power of 401(k) investing is really only coming into it&#x27;s own in the last decade or so, since 401(k) accounts have had 30 years to mature, total retirement assets now total well over $3 Trillion nationally.[1]<p>[0] <a href="http:&#x2F;&#x2F;www.americanhistoryusa.com&#x2F;give-me-liberty-or-give-me-debt-a-history-of-credit-cards&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.americanhistoryusa.com&#x2F;give-me-liberty-or-give-me...</a><p>[1] <a href="http:&#x2F;&#x2F;www.nber.org&#x2F;bah&#x2F;fall02&#x2F;changingCharacter.html" rel="nofollow">http:&#x2F;&#x2F;www.nber.org&#x2F;bah&#x2F;fall02&#x2F;changingCharacter.html</a>

<i>One of the most important points that the paper makes is that everyone’s income and wealth tend to follow a kind of natural pattern during their life. [People under 40] haven’t been working for many years, so they don’t have an opportunity to save as much; they also need to make investments in things like education and new home ownership. [People in their 40&#x27;s and 50&#x27;s] have worked long enough they start to accumulate wealth rapidly.</i><p>I don&#x27;t mean to SHOCK you, but did you know there&#x27;s a massive age gap between young and old people? Also, an experience gap. Something Must Be Done About This!

A large reason for that is a leveraged economy.<p>I still remember how hard it was to build up enough credit to move beyond prepaid cellphones.

The answer (which is the same as it has always been) is buried at the end:<p><i>If young people want to increase their chances of being wealthy, one strategy is to emulate the behavior of older people: keeping an emergency fund, paying down debt, avoiding high-cost credit, and putting money into higher-returning investments</i>

Well...at least the young are rich in &#x27;youth&#x27;.

So living in expensive cities like NYC&#x2F;SF and London when you are younger is also becoming impossible. But we still do it... Heaps of us.

&gt;If you’re over 62, your odds of having at least $1 million in net wealth (your total assets minus your total debt) are relatively achievable -- about 1 in 7. But if you are under 40, your odds are low: 1 in 55.<p>So the older you are the more time you have had to grow wealth. The younger you are the less time you have had. This is then forcibly tied into median family income?<p>this is huffington post tier article.