Editor's Note: Below is an excerpt from a recent research report written by Hedgeye Demography analyst Neil Howe. For information on how you can subscribe to his institutional research email sales@hedgeye.com.
A new study concludes that people born in the 1980s have a median net worth 34% below expected levels, the worst shortfall of any birth cohort alive today. Facing record-high student-loan debt and stagnant wages, Millennials may become the first American generation to do significantly worse than their parents financially.
The conclusions of this study, grounded on the lifecycle age-wealth "norm" defined over the post-1986 period, are both grim and plausible. I am familiar with the authors (the Center for Household Financial Stability at the St. Louis Fed), and in fact I contributed a similar piece on generational economic futures to the Fed Board of Governors' policy confab in D.C. in 2015.
Personally, I continue to worry more about Gen Xers than Millennials because they have much less time left to make up their retirement shortfall. Two or three good economic decades--say, starting in the mid-2020s--can make up nearly all lost ground for Millennials. But that wouldn't help Gen Xers much.
Let me reproduce two striking charts from the study here.
The first compares the deviation-from-lifecycle-norm in wealth at every age in three different periods: 1989-1998; 2001-2007; and 2010-2016. Note that every age bracket did well in the early-00s. But only the Silent Generation (see: "The Graying of Wealth") did well in both the early-00s and the 2010s. The second compares the deviation from the norm by age in percentage terms.
