Young Adults' Finances May Be Hard to Repair
March 18, 2013
Young generations were badly hit in the recession, and it could have widespread effects on their lives, from delaying home ownership to starting a family and having children to even one day eventually retiring.
A new study from the Urban Institute shows that those under the age of 40 have accumulated less wealth than their parents did at the same age. That coincides with a time when the average wealth of Americans has doubled over the last quarter-century , according to the study.
“In this country, the expectation is that every generation does better than the previous generation,” Caroline Ratcliffe, an author of the study, told The New York Times. “This is no longer the case. This generation might have less.”
Young adults are facing stagnant pay, a tough job market, soaring student loan debt, and some who did own a home may have faced lost equity or even foreclosure during the housing crisis.
Will younger adults ever be able to catch up?
According to the Urban Institute study, if a person delays buying a home to age 40 instead of age 30, that alone could result in a $42,000 loss in home equity by the time that person reaches age 60.
Still, “strong and sustained job and wage growth would cure many of the ills facing younger workers,” The New York Times reports. “But their delayed or diminished wealth accumulation might still have a lasting impact on their finances.”
Source: “Younger Generations Lag Parents in Wealth-Building,” The New York Times (March 14, 2013)
Updated: January 25, 2021