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Why are millennials born in the 80s getting richer? They own homes, enjoy discretionary income and can pay off debt – but the Covid-19 pandemic might put a dent in their wealth gains

According to a new report, millennials born in the 80s seem to be better off than most. Photo: Getty Images
According to a new report, millennials born in the 80s seem to be better off than most. Photo: Getty Images
millennials

  • According to a new report, higher education levels and more time left to earn put these millennials on a steeper income and wealth curve
  • But millennials born in the 90s have wealth levels 50 per cent below where they should be, and others with lower earnings or job cuts are struggling to survive

Older millennials are finally becoming wealthier. Over the past three years, they’ve gained serious ground in building wealth, according to a new report by the Federal Reserve Bank of St Louis that studied data from the US Survey of Consumer Finances. As of 2019, Americans born in the 1980s have median wealth levels 11 per cent below where they should be if the Great Recession of 2007-09 hadn’t occurred.

While this indicates millennials are still afflicted by the lingering effects of the financial crisis, it’s a far cry from where they stood in 2016, per a 2018 St Louis Fed study that examined the topic. At that point, their wealth levels were 34 per cent below where they should have been, causing the Fed to deem them at risk of becoming a “lost generation” for wealth accumulation.

“Not only is their wealth shortfall in 2016 very large in percentage terms, but the typical 1980s family actually lost ground in relative terms between 2010 and 2016, a period of rapidly rising asset values that buoyed the wealth of all older cohorts,” the 2018 report read.

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Millennials have since made such strides that the follow-up 2021 report sings a different tune. “It turns out that millennials may not be as ‘lost’ as we once thought,” wrote the report’s authors, Ana Hernández Kent and Lowell Ricketts.

An “unlost” generation

Millennials may still be feeling the effects of the financial crisis, but it’s a far cry from their position in 2016. Photo: handout
Millennials may still be feeling the effects of the financial crisis, but it’s a far cry from their position in 2016. Photo: handout

The economic environment and aftermath of the Great Recession made it difficult for the 1980s cohort to initially build wealth. They graduated into a dismal job market with little prospects and stagnated wages for the jobs that did exist, coupled with rising living costs and heavy student-loan debt.

The 2018 St Louis Fed report predicted that their higher education levels and time left to earn and save could put them on a steeper income and wealth trajectory, allowing them to eventually achieve their wealth goals.

The follow-up study shows these millennials are well on their way to fully catching up, although they now have fewer wealth-building avenues and less time to close the 11 per cent wealth deficit now that the oldest members are turning 40. They also had the highest debt burden of any birth group in 2019, which could set them back economically. 

Rising living costs and heavy student-loan debt are some of the burdens millennials carry. Photo: SCMP Graphic
Rising living costs and heavy student-loan debt are some of the burdens millennials carry. Photo: SCMP Graphic