The economic landscape in the United States is changing. As time marches on, the workforce has evolved from one primarily made up of Baby Boomers, to one made of Generation X-ers, and finally to its current state – where Boomers are retiring in droves and Millennials are the main driving force. However, the predominant age of the workforce isn’t the only thing that has changed over the past 30 years. Economic circumstances throughout the years have also heavily affected the lifestyles of American citizens, especially in regards to their ability to accumulate wealth over their lifetimes. Research has surfaced in recent years depicting just how dramatic the generational wealth gap has become and pointing out a few key factors that are likely contributing to the loss of financial stability from the Baby Boomers to the Millennials.

Who are the Baby Boomers, Gen Xers, and Millennials?

In recent years how to split each of these distinct groups has caused much confusion. Generational lines are often blurry, after all, and fence-sitting individuals may be unsure which generation is theirs. While the younger crowd often calls most older people “Boomers,” the same older citizens typically group younger people together as “Millennials.” This, unfortunately, usually leaves Generation X-ers feeling forgotten. 

According to the Pew Research Center, the most commonly accepted birth ranges for these generational cohorts are: 

  • Baby Boomers: 1946-1964 
  • Generation X: 1965-1980 
  • Millennials: 1981-1996 
  • Generation Z: 1997-2012 

However, cohorts are difficult to pin down and there are several differing opinions on when these generations in particular may have begun and ended. Some claim that a common experience during youth (such as growing up with an internet connection) defines a generation, while others state a generation’s beginning is spurred by some sort of event (like the end of World War II starting the Baby Boomer generation). 

Regardless of how you define these generations, all have had an immense impact on the economy and workforce.

The Wealth Gap Explained

Lately, Boomers and Millennials seem to be at each other’s throats according to the news media. In a tale as old as time and perpetuated by hundreds of generations before, older citizens like the Boomers and older Gen X-ers criticize the younger Millennials for being lazy, entitled, and rude to their elders. Meanwhile, younger crowds like Millennials and even Generation Z-ers lump all middle-aged and older adults together as Boomers and call them out-of-touch, intolerant, and greedy. Though this intergenerational mudslinging is certainly nothing new, there is actually some economic reason for the animosity between these groups.

Millennials, and even Generation X-ers to a lesser extent, through pure circumstance are experiencing an almost unprecedented generational wealth gap from their Baby Boomer predecessors. In other words, Millennials are on track to accumulate staggeringly less wealth over their lifetimes than Baby Boomers.

By the time Baby Boomers reached 35 years old, they accumulated 21 percent of the nation’s wealth. This was often enough to buy a house, get a college degree, start a family, and save for retirement – the true American Dream lifestyle. Unfortunately, the magic didn’t last for subsequent generations. At 35 years old, Generation X-ers began experiencing a decline in their lifetime wealth when compared to Boomers, holding only 9 percent of the nation’s wealth.

Though the eldest Millennials are pushing 40 years old, the average age will not be 35 until 2023. However, this generation is on track to suffer an even greater wealth gap. Millennials currently own just 4.6 percent of the nation’s wealth despite being the largest generation in the workforce. To catch up to Boomers’ earnings at the same point in life, Millennials would need to earn their wealth five times over within two years.

So, What Changed?

Is it really that Millennials are just lazy couch potatoes living at home and Boomers are money-hoarding misers? Don’t be so quick to judge.

In truth, this enormous wealth gap between generations is mostly a result of economic circumstances. Wealth may not indicate someone’s character or grit, but rather the times in which they were raised.

Baby Boomers came of age in the post-World War economic boom when new business opportunities and jobs were plenty. On a more obvious note, Boomers are older and therefore, have had longer to accumulate their wealth.

Unfortunately, Millennials came into the workforce on the heels of the Great Recession of 2008. Jobs were few and pay was low. Many had to find work in minimum wage positions to make ends meet. In addition, America was (and still is) in the throes of an Affordability and Debt Crisis. Housing, insurance premiums, car payments, high education tuition, and more has only exponentially increased in cost since the Boomers were of similar age. Millennials 25-34 are currently almost 5 billion dollars in student debt. While the costs of college degrees and housing increased, wages remained stagnant. This left many little choice but to cut costs however they could, including by living with their parents. As they attempt to pay their debt and save for a home, many Millennials have also avoided saving for retirement.

Now, with the pandemic having ravaged the economy, many laid-off Millennials are searching for work in a tight job market. When one considers this, it’s no wonder the generational wealth gap is as massive as it is.

Safeguard Your Wealth from Bad Actors

Accumulated wealth can be the difference between a comfortable lifestyle and one of struggle. With the economic landscape as distressed as it is, it’s important all Americans are vigilant with their finances. Unfortunately, many unscrupulous institutions have preyed on their consumers by overcharging their overdraft or NSF fees purposefully. At McCune Wright Wright Arevalo, LLP, we seek to hold these greedy corporations accountable and to protect our clients’ wealth. With millions of dollars in successes against businesses like Wells Fargo, our class action attorneys can help you seek justice.

If you believe you’ve been charged unfair or deceptive overdraft or NSF fees by your bank, contact us today or call (855) 976-3154.