The 2010 census data has revealed that U.S. households headed by a person age 65 or older have a net worth almost 50 times greater than a household headed by someone under the age of 35. What does this mean in real numbers? The typical young American family has a net worth of about $3,600 while their grandparents are worth around $170,500. This disparity has doubled in the past five years.

What is the cause for such a striking difference? Well, for the most part grandma has paid off her mortgage, saved for her retirement and probably inherited a small nest egg some years ago from her own parents. How about little Johnny and his bride? Well, today theirs is a different story.

The nice house they bought five years ago is probably worth less than what they paid for it. Also, let’s not forget about their respective student loan debt which they are both still paying. When you throw in auto loans and credit card debt, it all adds up (and subtracts from their net worth.) As for savings, what little has been added to 401(k) plans hasn’t grown much and these young people are less likely to inherit from their aging parents. So now you can see why they are only worth $3,600.

Currently, over a third of all younger American households now have a net worth of zero or less. This number has nearly doubled in 25 years. However, only about 8 percent of older American households have no net worth and this percentage has remained constant during this same 25 year period.

This will be the first generation that truly will not be better off than their parents. It can no longer be denied when we are seeing the accelerated pace of the widening of the wealth gap between the generations. One of the most basic tenets of the American Dream, the idea that each generation does better than the one before, appears to be dying.

It would seem as though the solution to this problem will require a complete economic reset including local job creation, lower cost education, affordable housing and retirement security. These are all things that sound very good when spoken on the campaign trail, at policy forums and written about in white papers but are difficult to implement. I don’t envy those who must work to bring about actual consensus and workable solutions to these problems.

Until then, I suspect this gap will continue to widen.

This entry was posted on Thursday, November 10th, 2011 at 9:08 pm and is filed under Family, Money Management, Personal Finance, Uncategorized, Wealth Gap. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.