Income gap between young and older Americans at its largest ever

November 07, 2011|CNN

NEW YORK (CNNMoney) -- Older Americans are now 47 times richer than the youngest generation, marking the largest wealth gap ever recorded between the two age groups.

In 2009, households headed by adults 65 years and older held a median net worth of $170,494, while households headed by adults 35 years and younger held a net worth of $3,662, according to a report by the Pew Research Center.

While it's typical for older generations to hold more wealth than younger ones who've had less time to save, the gap between the two age groups has widened rapidly.

A generation ago, the older age group was richer than the younger by a 10-to-1 ratio. Now, that gap stands at 47-to-1.

Compared to their same-aged peers in 1984, the younger group has actually seen its net worth decline 68%, but the older group has seen its wealth rise 42%.

So why the growing chasm?

Housing trends have played a major role, the Pew Center said. While rising home equity helped drive wealth gains for the older generation over a long timeframe, the younger generation has had less time to ride out the housing market's volatility -- especially its most recent boom and bust.

"Most of today's older homeowners got into the housing market long ago, at 'pre-bubble' prices," the report said. "Along with everyone else, they've been hurt by the housing market collapse of recent years, but over the long haul, most have seen their home equities rise."

"For young adults who are in the beginning stages of wealth accumulation, there has been no such luck, at least so far."

Meanwhile, the younger generation is also taking longer to enter the labor force and get married. And surging college costs are also leaving them burdened by more student loans than prior generations.

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