When it comes to economic well being over the past 25 years, older adults have made significant gains when compared to younger adults according to a Pew Research Center analysis of data from the U.S. Census. The recent collapse of the housing market and whether a household has a mortgage to pay are both factors in that difference in wealth.
The most recent data is from 2009, and that year the typical household headed by an adult 65 or older had $170,494 in net worth (all assets minus all debts), compared with just $3,662 for the typical household headed by an adult 35 or younger. Part of what caused that huge discrepancy in net worth is the fact that older adults got into the housing market when pre-bubble prices prevailed and 65 percent do not have to pay a mortgage.
The discrepancy is most dramatic when compared to data from 25 years ago. In 2009, the median net worth of households headed by the older adult was 42 percent more than that of their same-age counterparts in 1984. In contrast, in 2009, the net worth of a household headed by adults 35 and under was 68 percent less than that of their 1984 counterparts, leading the authors of the Pew Research Center report to categorize the difference as unprecedented.
Pew reports that about half of older adults purchased their present homes before 1986, according to the 2009 American Housing Survey, and that although they too were hurt by the collapse of the housing market, over time, most have seen their home equity rise. But for young adults who are still beginning to accumulate wealth, it's a different story. Among those who are homeowners, many bought their home as the housing bubble was inflating, the Pew analysis reports, and when the bubble burst, many were left with negative equity in their homes.
It is also not unusual to find large age-based gaps in wealth, since people generally accumulate wealth as they age, but as the Pew Research Center reports, in 1984, the age-based wealth gap was 10 to one, and by 2009, it had ballooned to 47 to 1.
As the researchers point out:
These age-based gaps widened significantly during the sour economy of recent years, but all key trends are several decades old, indicating that they are also linked to long-term demographic, social and economic changes that have affected different age groups in different ways.
The Rising Age Gap in Economic Well-Being [Pew Research Center]