Households headed by older adults have made dramatic gains in economic well-being relative to those headed by younger adults over the past quarter century, according to a new Pew Research Center analysis of a wide array of government data.
The typical household headed by adults over 65 had 47 times as much net wealth as one headed by adults under 35 — $170,494 versus $3,662 (all figures expressed in 2010 dollars). Back in 1984, this ratio had been less lopsided, at ten-to-one. In absolute terms, the oldest households in 1984 had a median net wealth $108,936 higher than that of the youngest households. In 2009, the gap had widened to $166,832.
The median net worth of older and younger households moved in opposite directions between 1984 and 2009. Older households gained 42% in median net worth while net worth for younger households fell by 68%. These age-based divergences widened substantially with the housing market collapse of 2006, the Great Recession of 2007-2009 and the ensuing jobless recovery. But this gap began appearing decades earlier, suggesting that it is linked to long-term demographic and social changes as much as it is to recent economic stagnation.
Housing has been the main driver of the household wealth gap. Compared with their counterparts in 1984, rising home equity has been the linchpin of the higher wealth of older households in 2009. Declining home equity has had the opposite effect on younger households.
Trends over the same period in other key measures of economic well-being—including annual income, poverty, homeownership, and home equity—all follow a similar pattern. Read More