Americans in their 30s are starting to bridge the wealth gap with prior generations, though Black millennials still lag far behind, according to new research from the Federal Reserve Bank of St. Louis.
In 2019, the net worth of households headed by people born in the 1980s was about 11% below where researchers expected it to be based on older Americans’ wealth at the same age, a huge improvement from the 40% gap in 2016.
Researchers worried that student debt and the legacy of the financial crisis might render millennials a “lost generation” that would never build wealth on par with their parents and grandparents. Prospects now look much brighter—for some of them, anyway.
“Those degrees are finally paying off, they’re paying down that debt and entering homeownership and milestones older generations were able to reach earlier on,” said Ana Hernández Kent, a senior researcher who worked on the analysis at the St. Louis Fed’s Institute for Economic Equity.
However, households headed by people born in the 1990s, which includes younger millennials and older members of Generation Z, were 50% below expectations in 2019, researchers found. This suggests that patterns of establishing wealth may have permanently shifted, Dr. Kent said. Young people now start off with more debt in their 20s but then start to pay that off, buy homes and build savings in their 30s.