The wealth gap between rich millennials and the rest of their age group is the largest of any generation, creating a new wave of class tension and resentment, according to a recent study.

Even as the vast majority of millennials struggle with student debt, low-wage service-jobs, unaffordable housing and low savings, the millennial elite are surpassing previous generations. According to the study, the average millennial has 30% less wealth at the age of 35 than baby boomers did at the same age. Yet the top 10% of millennials have 20% more wealth than the top baby boomers at the same age.

“Millennials are so different from one another that it is not particularly meaningful to talk about the ‘average’ Millennial experience,” wrote the study’s authors, Rob Gruijters, Zachary Van Winkle and Anette Eva Fasang. “There are some Millennials who are doing extremely well—think Mark Zuckerberg and Sam Altman—while others are struggling.”

The study finds that millennials — typically defined as those between the age of 28 and 43 today — have faced repeated financial headwinds. Coming of age during the financial crisis, they have lower levels of homeownership, larger debts outweighing assets, low-wage and unstable jobs, and lower rates of dual-income family formation.

At the same time, the authors say the top 10% of millennials have benefited from greater rewards for skilled jobs. As they put it, “The returns to high-status work trajectories have increased, while the returns to low-status trajectories have stagnated or declined.”

The millennials who “went to college, found graduate level jobs, and started families relatively late,” ended up with “higher levels of wealth than Baby Boomers with similar life trajectories,” according to the report.

The great wealth transfer

There may be another factor creating so much wealth among millennials: inheritances. In what’s known as “the great wealth transfer,” baby boomers are expected to pass down between $70 trillion and $90 trillion in wealth over the next 20 years. Much of that is expected to go to their millennial children. High-net-worth individuals worth $5 million or more will account for nearly half of that total, according to Cerulli Associates.

Tensions between millennial classes are likely to escalate as more wealth is transferred in the coming years. Wealth displays on social media by millennial “nepo babies” could add to the intra-generational class war and drive nonwealthy millennials to overspend or create the appearance of lavish lifestyles to keep up.

A survey by Wells Fargo found that 29% of affluent millennials (defined as having assets of $250,000 to over $1 million of investible assets) admit they “sometimes buy items they cannot afford to impress others.” According to the survey, 41% of affluent millennials admit to funding their lifestyles with credit cards or loans, versus 28% of Gen Xers and 6% of baby boomers. (Source: CNBC)

Story Date: April 28, 2024