Age, it seems, has a lot to do with wealth. The old gained money while the young lost their share.
This revelation was brought forth by a recent report, The Old Prosper Relative to the Young, by the Pew Research Center. The study took into consideration the rising age gap besides the economic well-being, and compared household heads over 65 years of age with that of adults aged 35 or younger.
They examined data that stretched over many years, especially from 1967, 1984, 2005, and 2009-2010. The time of comparison between the years 2005 and 2009-2010 displayed the Great Recession’s impact on the economy.
The report submitted some conclusions on their research – between 1984 to 2009, older households’ median net worth rose 42%, while the younger households had a reduction of 68%.
As time flew, there was considerable widening between the gap in wealth between older and younger households. In the year 1984, the median net worth of older households was calculated to be $108,000 higher than that of younger households.
It rose considerably over the years, and by 2009, the median net worth of older households stood $166,832 higher than that of younger households. The median adjusted annual income for younger households went up by 27%, from $38,555 in 1967 to $49,145 in 2010.
The income for older households at the same time rose up by 109%, from $20,804 to $43,401. Reduction in median net worth too didn’t affect the older households as much as it affected the younger ones.
Between the years 2005 to 2009, median net worth for older households suffered 6% decline when compared to a 55% decline for younger households. The adjusted median income of the oldest households had a rise of 8% while younger households had a 4% fall.
According to the authors, housing plays a big role in the trend. They said that older Americans have “the beneficiaries of good timing, in the form of the long run-up in home values that enabled them to accumulate wealth via home equity.”
The report details that older Americans purchased “long ago, at pre-bubble” prices”. Many of the younger households “bought as the bubble was inflating”, because of which the young adults have more on their mortgages than is worth for their homes.