There are many ways to divide different demographics to compare and contrast. One way that has been in vogue in many cultural/social conversations is to look at the financial positions of different generations over time.
People try to use this data to align their perceptions of these demographic groups with the well-known caricatures of them. Perhaps, the most common victim of this practice is the oft maligned Millennials— the “lazy, entitled” generation that is “not worth your time” to prospect.
However, when we detach our preconceived notions and apply a correct methodology to our research of the different demographics, we can see that things may be better than expected.
In a recent piece by First Trust’s Chief Economist Brian Wesbury “Respect Millennials”1 does just that and reveals the true financial positions of the different generations. Wesbury argues that the traditional methodology used to draw these conclusions has been flawed from the beginning. Instead of looking at the share of net worth, we should be looking at the average level of net worth as each generation ages.
Through this new lens, using the updated average net worth calculations, a different picture comes into focus. Today, the current Gen Xer is about 48.75 years old. Using this age for comparison, and after adjusting for inflation, the typical Boomer household had $730,000 at 48.75 years. By comparison, today’s Gen X household has $1.108 million.2 Clearly now, the average Gen X household is beating the average Boomer household at the same stage of their life.
Millennials are still too young (perhaps, one of the few positives about being a millennial) for the data to fully measure their wealth relative to Boomers, but we can see it relative to Gen X. Wesbury and team found that today, the average Millennial household, at age 32, has a net worth of $196,000. And yes, this includes Mark Zuckerberg! And back when Gen Xers were age 32, they had an average inflation-adjusted household net worth of $158,000.3
Some people might see that the data is being made to fit an argument. Yet, it is fair to say the ultimate conclusion here is that net worth and asset accumulation correlate directly to one’s stage in the life cycle. And with that, we know Millennials are just starting to hit their peak earning years, shrugging off the effects of the Great Recession—and ultimately ARE well worth an advisor’s time to prospect, whether they’re clients now or in the near future.
1 “Respect Millennials,” Brian S. Wesbury et al, First Trust Monday Morning Outlook, October 18, 2021.
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