The wealth gap between rich millennials and the rest of their age group is widening, creating a new wave of class tension and resentment, according to a recent study. While the majority of millennials struggle with challenges such as student debt, low-wage jobs, and unaffordable housing, the millennial elite are surpassing previous generations in terms of wealth accumulation. The study reveals that the average millennial has 30% less wealth at the age of 35 compared to baby boomers at the same age, but the top 10% of millennials have 20% more wealth than the top baby boomers did at the same age.
Millennials, typically defined as those between the ages of 28 and 43 today, have faced financial headwinds such as lower levels of homeownership, higher debts than assets, unstable low-wage jobs, and lower rates of dual-income family formation. However, the top 10% of millennials have benefited from increased rewards for skilled jobs, leading to a significant wealth gap within the generation. Those who pursued higher education, landed graduate-level jobs, and delayed starting families ended up with higher levels of wealth compared to baby boomers with similar life trajectories.
Another factor contributing to the wealth accumulation among millennials is the great wealth transfer expected to occur in the next 20 years as baby boomers are estimated to pass down between $70 trillion and $90 trillion in wealth to their millennial children. High-net-worth individuals worth $5 million or more are expected to account for a significant portion of this total transfer. Wealth management firms anticipate this transfer to accelerate in the coming years, leading to increasing tensions between different classes of millennials.
The battle between rich millennials and the rest of their generation may intensify as more wealth is transferred, potentially giving rise to attitudes towards wealth and class divisions. The rise of inherited wealth among millennials could challenge the traditional narrative of self-made millionaires and billionaires in America. Studies have shown that inherited wealth is becoming more common, with heirs outpacing self-made billionaires in wealth accumulation in recent years.
The surge in wealth among millennial heirs is creating a lucrative market for wealth management firms, luxury companies, travel firms, and real estate brokers. Wealthy millennials with inherited wealth are driving high-end real estate transactions, luxury purchases, and travel experiences. Brokers like Clayton Orrigo, who specializes in catering to moneyed millennials, have witnessed a growing demand from young buyers accessing family trusts and wealth for high-value investments. The trend of inherited wealth among millennials is reshaping the luxury market and the way wealth-management firms operate.
The divide between rich millennials with inherited wealth and the rest of their generation could lead to increased class tensions, attitudes towards wealth, and consumer behavior. The disparity in wealth accumulation, driven by the great wealth transfer and inheritance trends, is reshaping the landscape for affluent millennials and their peers. As more wealth is transferred, the impact on relationships within the generation, social media displays, and overall perceptions of wealth and success could shape the future dynamics of the millennial cohort.
