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How Baby Boomers Became the ‘Wealthiest Generation That Ever Lived’
By Adam Hardy MONEY RESEARCH COLLECTIVE
It has less to do with financial prudence and more to do with the luck of the draw.
Despite railing against the trappings of mainstream capitalist America in the ‘60s and ‘70s, baby boomers went on to trade their bohemian headbands for suits, ties — and blossoming investment portfolios.
Boomers, which were born between 1946 and 1964, have now become the “wealthiest generation that has ever lived,” according to a new global wealth report from the financial firm Allianz. And it doesn’t look like subsequent generations are going to be able to dethrone them anytime soon.
How boomers got so rich, Allianz’s analysis shows, has less to do with financial prudence and more to do with the luck of the draw.
“A unique historical situation — strong economic growth, affordable housing markets and booming equity markets — allowed them to build up a handsome fortune,” Allianz researchers wrote.
How are boomers so wealthy?
In the simplest terms, boomers have benefited the most from the economic gains of the past several decades while suffering the least from the financial crises — especially boomers who live in the U.S.
As of the end of June, American boomers had accumulated a staggering $80 trillion of wealth, according to Federal Reserve data. That’s more than half of all household wealth in the nation, despite boomers only making up about 20% of the U.S. population.
By comparison, Gen Xers (folks born between 1965 and 1980) held about $40 trillion. Millennials, born between 1981 and 1996, had around $15 trillion.
The lion’s share of boomer wealth comes from a trove of stock and real estate assets. In fact, the value of boomers’ stock portfolio alone — clocking in at $23 trillion — far exceeds the total wealth of all millennials.
The Allianz analysis suggests that this windfall mostly boils down to timing. The firm simulated how the wealth of different generations grew at vastly different rates despite individuals making all the same prudent financial decisions.
The analysis assumed these major factors stayed the same: a 45% equity ratio, a 10% annual savings rate and a 40-year savings period, starting at age 20.
- Under these circumstances, boomers enjoyed an average annual return of 9.1% and were able to amass a lifetime savings of over 850% of their disposable income.
- Gen Xers, under the same set of rules, had a 6.7% annual return and saved up 606% of their income.
- Millennials fared worse — with an annual return of 6.5% and a lifetime savings of 430% of their income.
Sure, personal behaviors play a role, as well. Allianz noted that increasing one’s savings rate above that 10% baseline and/or allocating more of one’s portfolio into higher-risk investments could yield a higher return. But the biggest hits to generational wealth — factors like interest rates and economic cycles (especially the ’90s stock market boom and the Great Recession bust) — are out of the general public’s control.
So for Gen Xers, it wasn’t their apathy that left them financially shortchanged. And millennials? No amount of penny pinching with homemade lattes is going to close the generational wealth gap.
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Adam Hardy is Money's lead data journalist. He writes news and feature stories aimed at helping everyday people manage their finances. He joined Money full-time in 2021 but has covered personal finance and economic topics since 2018. Previously, he worked for Forbes Advisor, The Penny Hoarder and Creative Loafing. In addition to those outlets, Adam’s work has been featured in a variety of local, national and international publications, including the Asia Times, Business Insider, Las Vegas Review-Journal, Yahoo! Finance, Nasdaq and several others. Adam graduated with a bachelor’s degree from the University of South Florida, where he studied magazine journalism and sociology. As a first-generation college graduate from a low-income, single-parent household, Adam understands firsthand the financial barriers that plague low-income Americans. His reporting aims to illuminate these issues. Since joining Money, Adam has already written over 300 articles, including a cover story on financial surveillance, a profile of Director Rohit Chopra of the Consumer Financial Protection Bureau and an investigation into flexible spending accounts, which found that workers forfeit billions of dollars annually through the workplace plans. He has also led data analysis on some of Money’s marquee rankings, including Best Places to Live, Best Places to Travel and Best Hospitals. He regularly contributes data reporting for Best Colleges, Best Banks and other lists as well. Adam also holds a multimedia storytelling certificate from Poynter’s News University and a data journalism certificate from the Investigative Reporters and Editors (IRE) at the University of Missouri. In 2017, he received an English teaching certification from the University of Cambridge, which he utilized during his time in Seoul, South Korea. There, he taught students of all ages, from 5 to 65, and worked with North Korean refugees who were resettling in the area. Now, Adam lives in Saint Petersburg, Florida, with his pup Bambi. He is a card-carrying shuffleboard club member.