9 ms·

The wealth gap between young and old people

91 points by jtzhou 11y ago

carsongross 11y ago
There is a huge generational disconnect between the boomer-driven media and political establishments and the X'ers and millenials. My prediction/hope is that the stereotype of millenials as relatively happy socialites will end up reversing, with them falling in with us burn-it-to-the-ground X'ers once they are old enough to realize how screwed they are.
- jtzhou 11y ago
  True, but there is definitely a lot of staying power in those currently of retirement age, kicking the can down the road, with a growing proportion of the population over age 65 (20% in 2020 versus 9% in 1970) receiving the benefits of Social Security and Medicare which are largely unfunded. There will have to be a number of cut-backs in retirement benefits for future retirees, including means-testing, removing the maximum wage for Social Security contributions, and higher Medicare premiums.
  - ForHackernews 11y ago
    > removing the maximum wage for Social Security contributions This sounds like a great idea to me. It's absurd that only the first $118,500 of earnings are subject to to social security tax, and it means that our tax structure is much less progressive than it appears at first glance (which is one reason certain people strenuously avoid talking about any taxes except Federal Income Taxes).
    - jmulho 11y ago
      The goal of the tax is not redistribution of wealth. The goal is to fund the benefits. The tax is capped because the benefits are capped.
      - plonh 11y ago
        That is nonsense. The first social security recipients paid 0 in. SS has always been a redistribution from workers to retirees, with no actuarial basis for the connection between how much you put it and how much you get out.
    - andyv 11y ago
      The social security tax is capped because the benefits are also capped. Billionaires don't need $100k/month in SS benefits.
    - twoodfin 11y ago
      It's not absurd: Social Security's benefits formula has significant "bend points" that make it an increasingly bad "investment" for higher income workers. Eliminating the wage cap would remove any remaining fig leaf covering its essentially redistributive nature: High income workers would have to live to 140 to get back what they "paid in" even without interest.
      - mikeash 11y ago
        Why do we need to keep a fig leaf to cover up what everybody already knows is there? We should either accept that Social Security is a form of welfare and rationalize it accordingly (my preference) or we should overhaul it to actually be the mandated savings scheme that it's said to be.
        bmelton 11y ago
        Because welfare isn't popular, it makes it more subject to the political climate, and because as a mandated savings scheme, social security isn't terribly performant.
  - toomuchtodo 11y ago
    > removing the maximum wage for Social Security contributions, and higher Medicare premiums. Ahh! So the question is, at what point will Millenials (myself included, at the older end of the spectrum at 32) say "f* it" when we're paying Europe-level taxes with third world country benefits * Single-payer Medicare for retires, expensive private insurance for everyone else * Social security essentially becomes a basic income for retirees, as its not an account that can be depleted but an entitlement until death, supported by younger workers with terrible job prospects and long hours at low pay Maybe the problem is that no one saves enough anymore, but that's because no one makes enough to save because most new income/wealth is kept by the very top wealth bracket.
    - nemo44x 11y ago
      You already do pay Europe level taxes - or should I say we do. Add up what you spend on all your taxes, state and Federal, look at medicare, SS your health insurance and other fees. Look at sales tax, property tax (even if you rent it is built in) and the various "fees" we have for things. Subtract all of this from your income and look at most of Western Europe and you'll see we pay roughly the same overall. I agree most people don't save enough. Part of it is people buy a lot of things they don't really need but "deserve" and the other is as you said.
      - refurb 11y ago
        US taxes rates are much lower than Western Europe save for a few outliers.[1] Note that this graph doesn't include VAT which can be 15%+ in the EU. [1]http://www.economist.com/blogs/graphicdetail/2012/10/focus-4 http://www.economist.com/blogs/graphicdetail/2012/10/focus-4
        mikeash 11y ago
        Why does that count employee social security contributions, but not employer contributions? Both ultimately come out of your paycheck. The fact that social security contributions are split is just a fiction that makes the tax rate look lower. It also sounds like it doesn't count state and local income taxes, nor property taxes or any of the many other taxes we have the privilege of paying. The conclusion may well be correct, but the data presented doesn't seem to be nearly complete enough to support it.
  - jandrewrogers 11y ago
    The reason there is a maximum on Social Security contributions and no means testing is that it is strongly marketed politically as a universal retirement account. Many of the system's characteristic are designed to ensure this perception. You receive Social Security roughly proportional to your contribution. This positioning is very important to the political support because there is the pretense of having earned it. If you remove the cap on contribution and/or means test the receipt then that pretense is gone. Politically, it becomes explicitly a welfare system for people that did not save for retirement and penalizes those that do save. Once Social Security is perceived as "unearned" it becomes an acceptable target for reduction or elimination to the population at large. Social Security is in fact a welfare tax and no one is entitled to receive it (see: https://en.wikipedia.org/wiki/Flemming_v._Nestor https://en.wikipedia.org/wiki/Flemming_v._Nestor) but its political viability is dependent on the popular perception to the contrary.
    - dragonwriter 11y ago
      > You receive Social Security roughly proportional to your contribution. Well, its a monotonically increasing function of your contributions, but its not proportional to them, because of the bend points. > If you remove the cap on contribution and/or means test the receipt then that pretense is gone. Means testing might arguably do that in theory (except that it empirically doesn't in practice, as SS is, in fact, already means-tested via the rules for taxability), but how does removing the contribution cap so long as further contributions above the old cap still contribute to the benefit calculation?
    - ForHackernews 11y ago
      People are dumb and don't pay close attention. I say raise the contribution cap, but don't means test it. That way everyone is still "paying in" and "getting back" the way they are now, but the extraordinarily wealthy will pay in much more than they receive. The average voter will continue to see SS as something "earned" rather than the entitlement program it [already] is.
- thirdtruck 11y ago
  Speaking as an older Millenial (by some measures), I'm fairly confident that "relatively happy socialites" has never been more than just a self-justifying projection by older generations. Perhaps our poor situation is just so obvious that, instead of mostly complaining, we're mostly fully resigned or preoccupied with fixing things in our own way. We are more Hero generation than Nomad, after all (https://en.wikipedia.org/wiki/Strauss%E2%80%93Howe_generational_theory#Archetypes https://en.wikipedia.org/wiki/Strauss%E2%80%93Howe_generatio...).
- eli_gottlieb 11y ago
  As thirdtruck noted, we Millenials have never actually acted much like the media portrayal of us. The high support Millenials evince for "socialism" in polls is a hint: we feel screwed-over, and we blame it on the system the Boomers keep saying they run.
- zeidrich 11y ago
  I've never felt millenials have been relatively happy socialites. I've felt millenials are the generation that feels the most helpless. Gen-X felt like they were promised something awesome and then screwed out of it. Millenials feel like they've got no chance to compete, so they don't expect it. Gen-X resented the fact that they had to try so hard to win the rat race. Millenials know they have no hope of winning or even finishing, so the best they can hope for is to make the race more tolerable. It's why you see things about how Millenials are more interested in comfort and work-life balance than straight up salary. Unlike the boomers who expected to work for a while and then retire on a nice nest-egg, and the Gen-Xers who struggled to meet an ever elusive goal of retirement, millenials don't have any expectation of retirement through normal means. They figure they're working forever, so they might as well get comfortable. I mean, years ago I talked to gen-x'ers and there was a lot of dissatisfaction and a feeling of a loss of control and opportunities, but a lot of people who gave up on their dreams and settled for a job that they hate with a pension. But with millenials, they're happy if they can take their 6 figure student loans and find any job at all, and a pension is a bizarre concept from a foreign world. They can't really hope to retire in the traditional sense, it's more like playing the lottery. There are some enterprising people who might make start-ups to try to get rich, but it's either get-rich or get-by, there's no sort of middle-class accumulation of wealth and a nice retirement at 65 any more. It's win big and buy a jet or eat spaghetti at home and avoid debt. So if you have two jobs to choose from, neither with a salary that makes an early retirement seem a reality, and one makes life a little bit more tolerable, your decision is between a life spent (at least partially) working a more tolerable job, or a life spent working a less tolerable job. So you opt for the job that pays a bit less but gives you more leeway for work-life balance. Boomers see that as an irresponsible happy-go-lucky delay of retirement, while millenials feel that that retirement idea is not really feasible, and if you're going to be working forever, you might as well enjoy it. Gen-X kind of got stuck in the middle where they end up trying to work really hard at something they hate for the chance to get that retirement but keep getting the rug pulled out. It's kind of like 3 people doing the limbo. The boomer plays, kind of bends a bit at the knees, leans his head back and gets under the stick. The Gen-X plays and when he first sees the bar it's nice and high, but as he gets closer and starts to go under the bar it keeps kind of getting lowered, so he keeps bending and contorting and struggling to get under the bar eventually. It hurts, but they still have hope they can get under it. The millenial looks at the bar, sitting ankle high and says fuck it and just decides to make the best of it on this side of the bar. Then the boomers hear about the x'ers struggle and say just bend your knees and lean your head back, it's not so hard, nobody had trouble with it in our day and we didn't even go to college. Then the boomers hear about the millenials not even bothering to try to get under the bar and say "they're just fooling around, they aren't thinking about their future, they're never going to get under that bar unless they stop fooling around and try." But the fact that the bar has moved is so often ignored. We're just all asked to bend further, and then blamed for not doing the impossible. The biggest difference between millenials and x'ers is that he millenials ARE aware of it, and that's why they can seem to be happy-go-lucky and less serious. It's easy to motivate you to work hard when you might feel like you can retire early and live in comfort. It's a lot harder to motivate you to sacrifice a lot to work hard when it feels like there will be no end to that work, ever. X'ers just got screwed because they got caught in the transition between easy future and no future.
MajorLOL 11y ago
>If you’re over 62, your odds of having at least $1 million in net wealth (your total assets minus your total debt) are relatively achievable -- about 1 in 7. But if you are under 40, your odds are low: 1 in 55. So the older you are the more time you have had to grow wealth. The younger you are the less time you have had. This is then forcibly tied into median family income? this is huffington post tier article.
- stephengillie 11y ago
  > Young people (generally defined here as those under 40) What is with the media and this strange concept of "young people" now being the 28-40 age bracket? Back in my day, "young people" meant 8-18 year olds. This isn't the only article making this bizarre wordplay. One of the previous USDS "submarine" articles referred to "young people" on a team as the members who were over 28.
  - mjevans 11y ago
    Clearly they are talking about 'the workforce' as 'people'. 'kids' are not considered anything but a cost center in their equation.
    - msandford 11y ago
      'kids' used to work and earn money. That used to be a real category. It's not anymore. A lot of people don't learn how to really manage their money until after they've graduated from college and realize that they're going broke and that there are no new loans. Is that irresponsible of them? Sure! But how were they supposed to learn if they couldn't get a job and make some of their own money?
  - chc 11y ago
    Like "big" and "fast," "young" is relative. A small person is much larger than a large ant, and a fast bike will generally go slower than a slow car. These people are young compared to the older people they're looking at.
- 11y ago
dataker 11y ago
A large reason for that is a leveraged economy. I still remember how hard it was to build up enough credit to move beyond prepaid cellphones.
11thEarlOfMar 11y ago
A couple of factors that play into this over the last 100 years: The prevalence of credit cards that increase the amount of depreciating goods young people can buy, and the long-term power of 401(k) investing. Expanded consumer credit, and it's appurtenant high interest rate cost, would tend to keep young people less wealthy towards the last half of last century. As credit card debt skyrocketed, savings rates plummeted from almost 11% in 1982, to 1.5% in 2007 [0]. Similarly, the power of 401(k) investing is really only coming into it's own in the last decade or so, since 401(k) accounts have had 30 years to mature, total retirement assets now total well over $3 Trillion nationally.[1] [0] http://www.americanhistoryusa.com/give-me-liberty-or-give-me-debt-a-history-of-credit-cards/ http://www.americanhistoryusa.com/give-me-liberty-or-give-me... [1] http://www.nber.org/bah/fall02/changingCharacter.html http://www.nber.org/bah/fall02/changingCharacter.html
- toomuchtodo 11y ago
  Don't forget wage stagnation over the last 40 years and the increased cost in college education (funded, yet again, by cheap credit backed by the federal government).
  - TheOtherHobbes 11y ago
    This. There's been a massive shift of wealth away from the middle classes. And college loans are just taxation by the back door - with the difference that instead of a graduate tax paid to the government, you pay a loan "tax" to the shareholders of the loan fund. In fact, taxation is increasingly privatised. Instead of paying taxes to government you pay a profit-surcharge on almost everything. This goes to corporate shareholders but provides little or no returned value. The result is that trillions of dollars are rotting uselessly in offshore tax havens, when they could have been invested in future economic development. And spending power has been suppressed, when it could have been driving the economy from the other end.
    - plonh 11y ago
      Dollars are illusory so they cannot rot. The government can always stimulate actual productivity by printing dollars to pass around.
falcolas 11y ago
Speaking only for myself and my parents - the factor here has been land. They both inherited several hundred acres of farm and ranch land, and purchased some land in-town when it was (inflation adjusted) $90,000, and is now in the $2-3 million range. They're both terrible at saving, their combined income was never over 50% of what I'm currently making, yet they have both been retired and comfortably living off these "investments" for 20+ years now. I, on the other hand, am just hoping that I can move to part-time work somewhere in my 60's. I'm hopeful, but it means keeping my current income levels for another 20 or so years, and avoiding any major health or other emergencies.
- gitah 11y ago
  Well your parents inherited almost a million dollars of real estate so comparing your situation to theirs seems unfair.
  - msandford 11y ago
    30-50 years ago farmland was a few hundred an acre in real terms. Today it's a few thousand. That's inflation adjusted so land has definitely appreciated considerably. http://www.ers.usda.gov/media/873616/farmrealestatevalues.pdf http://www.ers.usda.gov/media/873616/farmrealestatevalues.pd... What's the rising tide that floats all boats these days? It's not the stock market, it's not real estate, and it's not startups. I can't think of anything that keeps going up, except perhaps for inflation.
    - deleted 11y ago
      [deleted]
    - snickerdoodles 11y ago
      population
      - falcolas 11y ago
        Population growth is going down, and is even negative in many countries. Inflation... not so much.
mkozlows 11y ago
The biggest problem with this article is that the data in their core graph[1] doesn't actually match up with their claims. What that graph shows is what families were worth over a 14 year periods for a bunch of cohorts. And the data makes... a pretty smooth graph. There's lots of overlap and no obvious discontinuities, and no reason at all to think that there's any change in trend over time. The only apparent effect that even possibly shows that younger people are worse off comes in the last two data points of each young person's line. But that's a totally obvious artifact, because that's the 2008 recession, which was the worst event of the 1989-2013 period graphed. (The 2000 dot-com bust was not nearly as huge.) EVERYONE'S line goes down at that time, including the oldest cohorts. If the graph had more data, and showed what the 1901 cohort were like at age 31 (in the throes of the Great Depression), it would almost certainly be obvious that those 2008-driven dips aren't especially bad, comparatively. And yet, that's the old-person generation that is supposed to be the envy of the young. This is just terrible interpretation of some unsurprising data. [1] https://img.washingtonpost.com/wp-apps/imrs.php?src=https://img.washingtonpost.com/blogs/wonkblog/files/2015/07/whoa2.png&w=1484 https://img.washingtonpost.com/wp-apps/imrs.php?src=https://...
- deleted 11y ago
  [deleted]
shenanigoat 11y ago
Well...at least the young are rich in 'youth'.
- 6t6t6 11y ago
  Unfortunately, this kind of richness does not use to last really long.
ams6110 11y ago
The answer (which is the same as it has always been) is buried at the end: If young people want to increase their chances of being wealthy, one strategy is to emulate the behavior of older people: keeping an emergency fund, paying down debt, avoiding high-cost credit, and putting money into higher-returning investments
- pcurve 11y ago
  It's a sound premise, but young(er) people will never see the kind of boom that their parents experienced. Younger generation is permanently hosed. What this article fails to mention is all the privatization and regulations that have caused capital misallocation and favored certain classes of people.
traviagio 11y ago
So living in expensive cities like NYC/SF and London when you are younger is also becoming impossible. But we still do it... Heaps of us.
BrandonMarc 11y ago
One of the most important points that the paper makes is that everyone’s income and wealth tend to follow a kind of natural pattern during their life. [People under 40] haven’t been working for many years, so they don’t have an opportunity to save as much; they also need to make investments in things like education and new home ownership. [People in their 40's and 50's] have worked long enough they start to accumulate wealth rapidly. I don't mean to SHOCK you, but did you know there's a massive age gap between young and old people? Also, an experience gap. Something Must Be Done About This!

91 points by jtzhou 11y ago

There is a huge generational disconnect between the boomer-driven media and political establishments and the X'ers and millenials. My prediction/hope is that the stereotype of millenials as relatively happy socialites will end up reversing, with them falling in with us burn-it-to-the-ground X'ers once they are old enough to realize how screwed they are.

jtzhou 11y ago
True, but there is definitely a lot of staying power in those currently of retirement age, kicking the can down the road, with a growing proportion of the population over age 65 (20% in 2020 versus 9% in 1970) receiving the benefits of Social Security and Medicare which are largely unfunded. There will have to be a number of cut-backs in retirement benefits for future retirees, including means-testing, removing the maximum wage for Social Security contributions, and higher Medicare premiums.
- ForHackernews 11y ago
  > removing the maximum wage for Social Security contributions This sounds like a great idea to me. It's absurd that only the first $118,500 of earnings are subject to to social security tax, and it means that our tax structure is much less progressive than it appears at first glance (which is one reason certain people strenuously avoid talking about any taxes except Federal Income Taxes).
  - jmulho 11y ago
    The goal of the tax is not redistribution of wealth. The goal is to fund the benefits. The tax is capped because the benefits are capped.
    - plonh 11y ago
      That is nonsense. The first social security recipients paid 0 in. SS has always been a redistribution from workers to retirees, with no actuarial basis for the connection between how much you put it and how much you get out.
  - andyv 11y ago
    The social security tax is capped because the benefits are also capped. Billionaires don't need $100k/month in SS benefits.
  - twoodfin 11y ago
    It's not absurd: Social Security's benefits formula has significant "bend points" that make it an increasingly bad "investment" for higher income workers. Eliminating the wage cap would remove any remaining fig leaf covering its essentially redistributive nature: High income workers would have to live to 140 to get back what they "paid in" even without interest.
    - mikeash 11y ago
      Why do we need to keep a fig leaf to cover up what everybody already knows is there? We should either accept that Social Security is a form of welfare and rationalize it accordingly (my preference) or we should overhaul it to actually be the mandated savings scheme that it's said to be.
      - bmelton 11y ago
        Because welfare isn't popular, it makes it more subject to the political climate, and because as a mandated savings scheme, social security isn't terribly performant.
- toomuchtodo 11y ago
  > removing the maximum wage for Social Security contributions, and higher Medicare premiums. Ahh! So the question is, at what point will Millenials (myself included, at the older end of the spectrum at 32) say "f* it" when we're paying Europe-level taxes with third world country benefits * Single-payer Medicare for retires, expensive private insurance for everyone else * Social security essentially becomes a basic income for retirees, as its not an account that can be depleted but an entitlement until death, supported by younger workers with terrible job prospects and long hours at low pay Maybe the problem is that no one saves enough anymore, but that's because no one makes enough to save because most new income/wealth is kept by the very top wealth bracket.
  - nemo44x 11y ago
    You already do pay Europe level taxes - or should I say we do. Add up what you spend on all your taxes, state and Federal, look at medicare, SS your health insurance and other fees. Look at sales tax, property tax (even if you rent it is built in) and the various "fees" we have for things. Subtract all of this from your income and look at most of Western Europe and you'll see we pay roughly the same overall. I agree most people don't save enough. Part of it is people buy a lot of things they don't really need but "deserve" and the other is as you said.
    - refurb 11y ago
      US taxes rates are much lower than Western Europe save for a few outliers.[1] Note that this graph doesn't include VAT which can be 15%+ in the EU. [1]http://www.economist.com/blogs/graphicdetail/2012/10/focus-4 http://www.economist.com/blogs/graphicdetail/2012/10/focus-4
      - mikeash 11y ago
        Why does that count employee social security contributions, but not employer contributions? Both ultimately come out of your paycheck. The fact that social security contributions are split is just a fiction that makes the tax rate look lower. It also sounds like it doesn't count state and local income taxes, nor property taxes or any of the many other taxes we have the privilege of paying. The conclusion may well be correct, but the data presented doesn't seem to be nearly complete enough to support it.
- jandrewrogers 11y ago
  The reason there is a maximum on Social Security contributions and no means testing is that it is strongly marketed politically as a universal retirement account. Many of the system's characteristic are designed to ensure this perception. You receive Social Security roughly proportional to your contribution. This positioning is very important to the political support because there is the pretense of having earned it. If you remove the cap on contribution and/or means test the receipt then that pretense is gone. Politically, it becomes explicitly a welfare system for people that did not save for retirement and penalizes those that do save. Once Social Security is perceived as "unearned" it becomes an acceptable target for reduction or elimination to the population at large. Social Security is in fact a welfare tax and no one is entitled to receive it (see: https://en.wikipedia.org/wiki/Flemming_v._Nestor https://en.wikipedia.org/wiki/Flemming_v._Nestor) but its political viability is dependent on the popular perception to the contrary.
  - dragonwriter 11y ago
    > You receive Social Security roughly proportional to your contribution. Well, its a monotonically increasing function of your contributions, but its not proportional to them, because of the bend points. > If you remove the cap on contribution and/or means test the receipt then that pretense is gone. Means testing might arguably do that in theory (except that it empirically doesn't in practice, as SS is, in fact, already means-tested via the rules for taxability), but how does removing the contribution cap so long as further contributions above the old cap still contribute to the benefit calculation?
  - ForHackernews 11y ago
    People are dumb and don't pay close attention. I say raise the contribution cap, but don't means test it. That way everyone is still "paying in" and "getting back" the way they are now, but the extraordinarily wealthy will pay in much more than they receive. The average voter will continue to see SS as something "earned" rather than the entitlement program it [already] is.
thirdtruck 11y ago
Speaking as an older Millenial (by some measures), I'm fairly confident that "relatively happy socialites" has never been more than just a self-justifying projection by older generations. Perhaps our poor situation is just so obvious that, instead of mostly complaining, we're mostly fully resigned or preoccupied with fixing things in our own way. We are more Hero generation than Nomad, after all (https://en.wikipedia.org/wiki/Strauss%E2%80%93Howe_generational_theory#Archetypes https://en.wikipedia.org/wiki/Strauss%E2%80%93Howe_generatio...).
eli_gottlieb 11y ago
As thirdtruck noted, we Millenials have never actually acted much like the media portrayal of us. The high support Millenials evince for "socialism" in polls is a hint: we feel screwed-over, and we blame it on the system the Boomers keep saying they run.
zeidrich 11y ago
I've never felt millenials have been relatively happy socialites. I've felt millenials are the generation that feels the most helpless. Gen-X felt like they were promised something awesome and then screwed out of it. Millenials feel like they've got no chance to compete, so they don't expect it. Gen-X resented the fact that they had to try so hard to win the rat race. Millenials know they have no hope of winning or even finishing, so the best they can hope for is to make the race more tolerable. It's why you see things about how Millenials are more interested in comfort and work-life balance than straight up salary. Unlike the boomers who expected to work for a while and then retire on a nice nest-egg, and the Gen-Xers who struggled to meet an ever elusive goal of retirement, millenials don't have any expectation of retirement through normal means. They figure they're working forever, so they might as well get comfortable. I mean, years ago I talked to gen-x'ers and there was a lot of dissatisfaction and a feeling of a loss of control and opportunities, but a lot of people who gave up on their dreams and settled for a job that they hate with a pension. But with millenials, they're happy if they can take their 6 figure student loans and find any job at all, and a pension is a bizarre concept from a foreign world. They can't really hope to retire in the traditional sense, it's more like playing the lottery. There are some enterprising people who might make start-ups to try to get rich, but it's either get-rich or get-by, there's no sort of middle-class accumulation of wealth and a nice retirement at 65 any more. It's win big and buy a jet or eat spaghetti at home and avoid debt. So if you have two jobs to choose from, neither with a salary that makes an early retirement seem a reality, and one makes life a little bit more tolerable, your decision is between a life spent (at least partially) working a more tolerable job, or a life spent working a less tolerable job. So you opt for the job that pays a bit less but gives you more leeway for work-life balance. Boomers see that as an irresponsible happy-go-lucky delay of retirement, while millenials feel that that retirement idea is not really feasible, and if you're going to be working forever, you might as well enjoy it. Gen-X kind of got stuck in the middle where they end up trying to work really hard at something they hate for the chance to get that retirement but keep getting the rug pulled out. It's kind of like 3 people doing the limbo. The boomer plays, kind of bends a bit at the knees, leans his head back and gets under the stick. The Gen-X plays and when he first sees the bar it's nice and high, but as he gets closer and starts to go under the bar it keeps kind of getting lowered, so he keeps bending and contorting and struggling to get under the bar eventually. It hurts, but they still have hope they can get under it. The millenial looks at the bar, sitting ankle high and says fuck it and just decides to make the best of it on this side of the bar. Then the boomers hear about the x'ers struggle and say just bend your knees and lean your head back, it's not so hard, nobody had trouble with it in our day and we didn't even go to college. Then the boomers hear about the millenials not even bothering to try to get under the bar and say "they're just fooling around, they aren't thinking about their future, they're never going to get under that bar unless they stop fooling around and try." But the fact that the bar has moved is so often ignored. We're just all asked to bend further, and then blamed for not doing the impossible. The biggest difference between millenials and x'ers is that he millenials ARE aware of it, and that's why they can seem to be happy-go-lucky and less serious. It's easy to motivate you to work hard when you might feel like you can retire early and live in comfort. It's a lot harder to motivate you to sacrifice a lot to work hard when it feels like there will be no end to that work, ever. X'ers just got screwed because they got caught in the transition between easy future and no future.

MajorLOL 11y ago

>If you’re over 62, your odds of having at least $1 million in net wealth (your total assets minus your total debt) are relatively achievable -- about 1 in 7. But if you are under 40, your odds are low: 1 in 55. So the older you are the more time you have had to grow wealth. The younger you are the less time you have had. This is then forcibly tied into median family income? this is huffington post tier article.

stephengillie 11y ago
> Young people (generally defined here as those under 40) What is with the media and this strange concept of "young people" now being the 28-40 age bracket? Back in my day, "young people" meant 8-18 year olds. This isn't the only article making this bizarre wordplay. One of the previous USDS "submarine" articles referred to "young people" on a team as the members who were over 28.
- mjevans 11y ago
  Clearly they are talking about 'the workforce' as 'people'. 'kids' are not considered anything but a cost center in their equation.
  - msandford 11y ago
    'kids' used to work and earn money. That used to be a real category. It's not anymore. A lot of people don't learn how to really manage their money until after they've graduated from college and realize that they're going broke and that there are no new loans. Is that irresponsible of them? Sure! But how were they supposed to learn if they couldn't get a job and make some of their own money?
- chc 11y ago
  Like "big" and "fast," "young" is relative. A small person is much larger than a large ant, and a fast bike will generally go slower than a slow car. These people are young compared to the older people they're looking at.
11y ago

dataker 11y ago

A large reason for that is a leveraged economy. I still remember how hard it was to build up enough credit to move beyond prepaid cellphones.

11thEarlOfMar 11y ago

A couple of factors that play into this over the last 100 years: The prevalence of credit cards that increase the amount of depreciating goods young people can buy, and the long-term power of 401(k) investing. Expanded consumer credit, and it's appurtenant high interest rate cost, would tend to keep young people less wealthy towards the last half of last century. As credit card debt skyrocketed, savings rates plummeted from almost 11% in 1982, to 1.5% in 2007 [0]. Similarly, the power of 401(k) investing is really only coming into it's own in the last decade or so, since 401(k) accounts have had 30 years to mature, total retirement assets now total well over $3 Trillion nationally.[1] [0] http://www.americanhistoryusa.com/give-me-liberty-or-give-me-debt-a-history-of-credit-cards/ http://www.americanhistoryusa.com/give-me-liberty-or-give-me... [1] http://www.nber.org/bah/fall02/changingCharacter.html http://www.nber.org/bah/fall02/changingCharacter.html

toomuchtodo 11y ago
Don't forget wage stagnation over the last 40 years and the increased cost in college education (funded, yet again, by cheap credit backed by the federal government).
- TheOtherHobbes 11y ago
  This. There's been a massive shift of wealth away from the middle classes. And college loans are just taxation by the back door - with the difference that instead of a graduate tax paid to the government, you pay a loan "tax" to the shareholders of the loan fund. In fact, taxation is increasingly privatised. Instead of paying taxes to government you pay a profit-surcharge on almost everything. This goes to corporate shareholders but provides little or no returned value. The result is that trillions of dollars are rotting uselessly in offshore tax havens, when they could have been invested in future economic development. And spending power has been suppressed, when it could have been driving the economy from the other end.
  - plonh 11y ago
    Dollars are illusory so they cannot rot. The government can always stimulate actual productivity by printing dollars to pass around.

falcolas 11y ago

Speaking only for myself and my parents - the factor here has been land. They both inherited several hundred acres of farm and ranch land, and purchased some land in-town when it was (inflation adjusted) $90,000, and is now in the $2-3 million range. They're both terrible at saving, their combined income was never over 50% of what I'm currently making, yet they have both been retired and comfortably living off these "investments" for 20+ years now. I, on the other hand, am just hoping that I can move to part-time work somewhere in my 60's. I'm hopeful, but it means keeping my current income levels for another 20 or so years, and avoiding any major health or other emergencies.

gitah 11y ago
Well your parents inherited almost a million dollars of real estate so comparing your situation to theirs seems unfair.
- msandford 11y ago
  30-50 years ago farmland was a few hundred an acre in real terms. Today it's a few thousand. That's inflation adjusted so land has definitely appreciated considerably. http://www.ers.usda.gov/media/873616/farmrealestatevalues.pdf http://www.ers.usda.gov/media/873616/farmrealestatevalues.pd... What's the rising tide that floats all boats these days? It's not the stock market, it's not real estate, and it's not startups. I can't think of anything that keeps going up, except perhaps for inflation.
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  - snickerdoodles 11y ago
    population
    - falcolas 11y ago
      Population growth is going down, and is even negative in many countries. Inflation... not so much.

mkozlows 11y ago

The biggest problem with this article is that the data in their core graph[1] doesn't actually match up with their claims. What that graph shows is what families were worth over a 14 year periods for a bunch of cohorts. And the data makes... a pretty smooth graph. There's lots of overlap and no obvious discontinuities, and no reason at all to think that there's any change in trend over time. The only apparent effect that even possibly shows that younger people are worse off comes in the last two data points of each young person's line. But that's a totally obvious artifact, because that's the 2008 recession, which was the worst event of the 1989-2013 period graphed. (The 2000 dot-com bust was not nearly as huge.) EVERYONE'S line goes down at that time, including the oldest cohorts. If the graph had more data, and showed what the 1901 cohort were like at age 31 (in the throes of the Great Depression), it would almost certainly be obvious that those 2008-driven dips aren't especially bad, comparatively. And yet, that's the old-person generation that is supposed to be the envy of the young. This is just terrible interpretation of some unsurprising data. [1] https://img.washingtonpost.com/wp-apps/imrs.php?src=https://img.washingtonpost.com/blogs/wonkblog/files/2015/07/whoa2.png&w=1484 https://img.washingtonpost.com/wp-apps/imrs.php?src=https://...

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shenanigoat 11y ago

Well...at least the young are rich in 'youth'.

6t6t6 11y ago
Unfortunately, this kind of richness does not use to last really long.

ams6110 11y ago

The answer (which is the same as it has always been) is buried at the end: If young people want to increase their chances of being wealthy, one strategy is to emulate the behavior of older people: keeping an emergency fund, paying down debt, avoiding high-cost credit, and putting money into higher-returning investments

pcurve 11y ago
It's a sound premise, but young(er) people will never see the kind of boom that their parents experienced. Younger generation is permanently hosed. What this article fails to mention is all the privatization and regulations that have caused capital misallocation and favored certain classes of people.

traviagio 11y ago

So living in expensive cities like NYC/SF and London when you are younger is also becoming impossible. But we still do it... Heaps of us.

BrandonMarc 11y ago

One of the most important points that the paper makes is that everyone’s income and wealth tend to follow a kind of natural pattern during their life. [People under 40] haven’t been working for many years, so they don’t have an opportunity to save as much; they also need to make investments in things like education and new home ownership. [People in their 40's and 50's] have worked long enough they start to accumulate wealth rapidly. I don't mean to SHOCK you, but did you know there's a massive age gap between young and old people? Also, an experience gap. Something Must Be Done About This!