I saw a great graph on vital capitalist the other day. It looks a bit like this.
Here’s a link to the original.
A main take-away offered by the creator is that Baby Boomers control a whopping 50% of the total wealth in the US while other generations lag far behind. And, it’s true. As a generation, Boomers are extremely wealthy at this point in their journey.
The other implication is that those much maligned Millennials are so busy staring at their iPhones and buying avocado toast that they’re missing opportunities to build real wealth. Look at how pitifully small their generational net worth line is compared to the Boomers.
But, are they really so far behind? It turns out that age matters quite a lot in the race to build wealth. The youngest Boomers are 60. The oldest are 78. If you are a Millennial born in 1981, you’re turning 43 this year. If you were born in 1996, you turn 28 this year. We shouldn’t compare the assets of a 65 year old to the assets of a 25 year old.
So what if we took the exact same data but started all the generations at the same time and looked to see how well they did accumulating net worth during their lifetimes. The plot would look something like this.
Remember, this is the same data, but it’s put onto the same axis such that each generation starts the race at the same time. Now, it doesn’t look like the Boomers are the clear winners of the race. Both the Gen X’ers and the Millennials have appear to have accumulated higher net worths by the same “generational age.”
I admit, the data set is incomplete. The Distribution of Financial Assets data set only goes back so far. So, we’re doing a bit of mental extrapolation during both the Baby Boomers and Silent Generations’ respective youth.
Another criticism could be that based on my (admittedly quick) read through of the DFA description, there is not an inflation adjustment applied to this dataset. 1986 dollars are not the same as 2024 dollars.
If you want to make an inference about how much or when Gen X or the Millennials will achieve a certain wealth level, it would require a lot of extrapolation using exponential growth. For now, I’ll leave that as an exercise for the reader. But, I like the idea of the footrace being less clear cut in favor of the Boomers.