One group has seen its wealth surge since 2019: Americans under 40

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Young Americans and the economy

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In the years since the pandemic, many Americans have enjoyed a wealth boost, thanks to a booming stock market and a rise in housing values. But one group far outperformed other demographics during the past five years: workers under 40. 

The wealth of Americans between the ages of 18 to 39 has jumped by 80% since 2019, compared with a 10% increase for those between 40 to 54 and 30% for people over 55, according to a new analysis from the Federal Bank of New York.

Younger workers likely saw their assets grow so sharply because they invest more heavily in equities and mutual funds than older Americans, who typically shift their investments away from stocks and into less volatile assets as they get closer to retirement, the analysis shows.

People under 40 are also the poorest among the nation’s generations, which means they received more stimulus funding during the pandemic, the researchers noted. Some of those young workers put their stimulus checks into the stock market, some researchers have found

That likely helped juice this group’s wealth during the past few years. The stock market has shown strong performance since January 2019 (excepting the bear market of 2022), with the S&P 500 more than doubling during that time. 

“The under-40 group experienced a much greater increase in equity portfolio share than the older groups did; this increased exposure to equities — the fastest-growing financial asset class during the period — enabled younger adults to record higher growth in both financial assets and overall wealth,” NY Fed researchers Rajashri Chakrabarti, Natalia Emanuel and Ben Lahey wrote in a blog post about the analysis.

At the start of 2019, people under 40 collectively held about $5.1 trillion in wealth, the analysis found. By July 2023, that number had jumped to $8.9 trillion. 

The findings echo the Federal Reserve’s Survey of Consumer Finances, which in October noted that people under 35 years old saw their median net worth more than double to $39,000 in 2022 from $16,000 in 2019. The New York Fed data didn’t include wealth on a per-person basis.

Most wealth still held by older Americans

But even with those gains, the under-40 crowd still holds a fraction of the nation’s overall wealth, the researchers pointed out.

At the start of the pandemic, younger Americans held about 4.9% of the nation’s wealth, even though people under 40 comprise about 37% of the population. Even after their 80% surge in wealth, younger workers still are trailing far behind older Americans, the data shows, the researchers noted.

For instance, people over 55 controlled about $74.5 trillion in wealth at the start of 2019. By July 2023, that percentage jumped 30% — to $97.3 trillion, or more than 10 times the wealth held by people under 40.

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Even middle-aged Americans, whose asset growth lagged that of both older and younger workers during the pandemic, remain far wealthier than people under 40, the data shows. Workers between 40 to 54 controlled about $24.5 trillion in wealth in early 2019, an amount that rose about 10% to $27.3 trillion in July 2023.

Racial wealth gaps worsened 

In a related analysis published Wednesday, the New York Fed found that the racial wealth gap has worsened since 2019.

White households held about 92.4% of U.S. wealth at the start of 2019, compared with 2.7% for Hispanic households and 4.9% for Black families, the analysis noted.

During the pandemic, White families saw their wealth jump by about 28%, while the assets of Hispanic families rose about 20% in value. Black households, meanwhile, saw a reduction in wealth during the past five years, with assets losing about 1.5% of their value. 

The reason could be tied to the types of investments that are most likely to be held by these different groups, the researchers noted. For instance, more than half of financial wealth for Black families is held in pensions, either traditional pensions or 401(k)s and other defined contribution plans. 

White families are more likely to invest in equities, mutual funds and businesses, they noted. Because equities performed strongly during the pandemic, those households may have seen a lift from their investment mix. 

Aimee Picchi

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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