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Marquette Wire

The student news site of Marquette University

Marquette Wire

The student news site of Marquette University

Marquette Wire

Study show wealth gap grows with age

When Pete Townsend sang, “I hope I die before I get old” in the hit song “My Generation” in 1965, he definitely wasn’t predicting those of retiring age would be worth 47 times their young counterparts in the U.S. 46 years later.

According to a Pew Research Center study released earlier this month, the wealth gap between those aged 65 and older compared to adults younger than 35 in 2009 was the largest ever recorded.

The median net worth for those 65 and older in 2009 was $170,494, compared to the younger generation’s median net worth of only $3,662.

Perhaps more troubling for the youth is the fact that young adults have lost ground to their 1984 young adult counterparts, who were worth $11,521. That number is 68 percent higher than that of the 2009 young adults.

Marquette economics professor John Davis said the widely held American belief that every generation will be better off than the last has contributed to the current wealth gap.

“Right now you have a lot of young people taking on debt, student loans in particular, thinking things will be better off for them in the future,” Davis said. “That may be wise, but right now what’s happened is that many young people have found themselves weighed down by that debt.”

Davis said it remains to be seen whether young people can replicate the economic growth of the older generation, who didn’t have to deal with the same type of debt entering the work force. But that debt greatly influences their net wealth, which is calculated as the sum of assets (houses, cars, bank accounts, etc.) netted against all debt, according to Pew.

Pew researchers, who compiled the data from U.S. Census numbers, cited several possible reasons for the losses in net wealth among young people, including student loan debt and losses in the housing market.

“Households headed by adults younger than 35 had less housing wealth in 2009 than did households headed by younger adults in 1984,” the report states. “These household heads are slightly less likely to be homeowners … and home equity plays a smaller role in their overall wealth (31 percent in 2009 versus 46 percent in 1984).”

Cody Hartzheim, a junior in the College of Business Administration, said it is common sense the older generation would have more wealth because they have had their whole working lives to accumulate it.

“I’ll have my own chance to build up wealth as I get older,” he said.

Hartzheim did express concern as a young adult, however, about the weak job market in which older people have an advantage over students just out of college because of their maturity and experience.

Another notable statistic from the study regarding young adults is that 37 percent of households headed by young adults have zero or negative net wealth, meaning debt and expenses surpassed any accumulated savings or other assets.

Colin Griffin, a junior in the College of Engineering, said he doesn’t normally think about whether he has a positive or negative net wealth.

“I’m lucky my parents pay my tuition, so I don’t have any student loans debt,” Griffin said. “But I also don’t have too many assets I own myself. I guess I’d be pretty close to zero but probably on the positive side still.”

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