Benjamin Hughes

May 2, 2024 - 14:30 pm

Growing Wealth Disparity Among Millennials

The wealth gap between affluent millennials and their peers is now the largest of any generation, causing increased class tension and resentment. A significant portion of millennials faces challenges such as student debt, low-wage jobs, and unaffordable housing, while the wealthiest top 10% of their generation now possess 20% more wealth than the wealthiest baby boomers did at the same age. This stark contrast has been highlighted in recent studies, including one featured in CNBC’s Inside Wealth newsletter, which discusses these economic disparities.

The Impact of Historical and Economic Context

Millennials have encountered numerous financial setbacks, including the Great Recession, which has affected their ability to accumulate wealth compared to previous generations. This group has generally experienced lower levels of homeownership, higher debt, and unstable job markets. Conversely, the most successful millennials have benefited from high-status job trajectories and later life milestones, which have afforded them greater wealth accumulation, as detailed by researchers Rob Gruijters, Zachary Van Winkle, and Anette Eva Fasang.

The Influence of Inheritance: The Great Wealth Transfer

A significant factor contributing to the wealth of affluent millennials is the anticipated inheritance from baby boomers, projected to be between $70 trillion to $90 trillion over the next two decades, as reported by Cerulli Associates. Wealth management firms, like UBS’ Private Wealth Management, note that this transfer is already beginning, affecting economic dynamics across generations.

Social Dynamics and Lifestyle Inflation

Social media and societal pressures are intensifying class tensions among millennials, with affluent individuals often showcasing their wealth, prompting their less wealthy peers to emulate a similar lifestyle. According to a survey by Wells Fargo, a significant number of affluent millennials admit to purchasing items they cannot afford just to impress others, exacerbating their financial strain.

Shifting Attitudes Toward Wealth and Inheritance

The nature of wealth acquisition is changing, with a move towards inherited wealth becoming more prominent among the newest billionaires, as opposed to the traditionally self-made routes. This shift is evident from reports by UBS and Fidelity Investments, which highlight the growing prevalence of inherited wealth among the ultra-rich, marking a notable change in the origins of wealth.

Millennial Heirs Driving New Markets

The increase in wealth among millennial heirs is creating lucrative opportunities for industries such as wealth management, luxury goods, and real estate. Clayton Orrigo, a top luxury real estate broker in Manhattan, exemplifies this trend, having built a significant portion of his business catering to young, affluent millennials with inherited wealth, often engaged through discreet dealings with family offices and exclusive clubs like Casa Cipriani.

These developments outline a complex picture of generational wealth, highlighting both the opportunities and challenges posed by the current economic landscape. The varying experiences of millennials – from inherited wealth to financial hardship – underscore the diverse economic realities facing this generation.