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The wealth gap between young and old people

washingtonpost.com

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Re: The wealth gap between young and old people

#21

Post by mkozlows »

scarmig wrote: post #6
MajorLOL wrote: post #3

>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.

That's missing the point entirely: yes, older people usually have more money than younger people. But there's been a drastic, meaningful change in just how much richer older people are than younger. Maybe there are good reasons for this, maybe not, but it's not just a restatement of the obvious.

Except there hasn't really been. If you look at their graph of wealth by age for all cohorts, the younger ones are actually ahead of the older ones up until the 2008 recession hits; and yeah, they drop after that, but then resume climbing. The effect does not look drastic unless you cherry pick a few years to focus on.

Re: The wealth gap between young and old people

#22

Post by falcolas »

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.

Re: The wealth gap between young and old people

#23

Post by mkozlows »

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://...

Re: The wealth gap between young and old people

#24

Post by nemo44x »

toomuchtodo wrote: post #13
jtzhou wrote: post #7

Earlier quoted context omitted.

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 m…

> 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 i…

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.

Re: The wealth gap between young and old people

#25

Post by [deleted] »

mkozlows wrote: post #23

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…

[deleted]

Re: The wealth gap between young and old people

#26

Post by gitah »

falcolas wrote: post #22

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…

Well your parents inherited almost a million dollars of real estate so comparing your situation to theirs seems unfair.

Re: The wealth gap between young and old people

#27

Post by eli_gottlieb »

carsongross wrote: post #2

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.

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.

Re: The wealth gap between young and old people

#28

Post by chc »

stephengillie wrote: post #4
MajorLOL wrote: post #3

>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.

> 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.

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.

Re: The wealth gap between young and old people

#29

Post by msandford »

gitah wrote: post #26
falcolas wrote: post #22

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…

Well your parents inherited almost a million dollars of real estate so comparing your situation to theirs seems unfair.

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.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.

Re: The wealth gap between young and old people

#30

Post by TheOtherHobbes »

toomuchtodo wrote: post #12
11thEarlOfMar wrote: post #11

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 plummet…

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).

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.

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