The age wealth gap
A report was just released documenting how differences in wealth between the young and the elderly have changed in recent decades. In terms of wealth, are we coming together or growing apart? N.C. State University economist answers.
“I found this report fascinating because we have a lot of statistics out there, obviously, on the economy and incomes and employment and unemployment and wealth. This report … focused on wealth differences between the young — we’ll say those under age 35 — and the old — we’ll say those over age 65. And the report looked at the period 1984 to 2009.
“What they found was, I think, very dramatic differences. Wealth for people over age 65 over that 25-year period actually rose by 42 percent. But wealth for people under age 35 went down 68 percent. An amazing difference.
“And you might say, ‘Well, why?’ Well, a couple of factors here: First of all, if you look at employment, more of the elderly — more of older people — are actually working now. That’s helping them save money and add to their wealth.
“But I think the big factor has been the housing market. We all know the housing market has really taken a big hit in recent years. That means for a young person, someone under age 35 who recently bought a home, they probably have seen that value go down, whereas an older person who perhaps bought a home 20 or 25 years ago, yes they have suffered. They’ve seen their price go down. But over the long run, because prices went up so dramatically from say ’84 to ’07, over the long run they’re still up in terms of the housing wealth.
“So really, I think it’s the housing market and how it’s affected older folks and younger folks differently that accounts for this big difference in wealth trends by age.”Category: Economic Perspective