Millennials have shown a dramatic reversal in overall wealth since 2022, according to a paper by the Center for Retirement Research at Boston College. This news arrives after Millennials have previously lagged behind older generations in wealth holdings, primarily due to high levels of student debt.
The CRR has found that the increase in millennials’ net median worth is largely due to an increase in housing wealth. This reflects the significant increase in house prices that occurred during the pandemic.
The low wealth of Millenials – otherwise known as those born between 1981 and 1996 – has been a source of concern, given that they will live longer lives and need to support more years of retirement than generations before. With the increase in Social Security’s full retirement age to 67, Millennials will also receive fewer benefits relative to pre-retirement incomes than earlier cohorts, according to the paper by CRR.
Before the COVID-19 pandemic in 2019, Millennials between the ages of 28 and 38 had a median net wealth-to-income ratio of a recorded 56%, which lagged behind those in Generation X and the Baby Boomers at the time. By 2022, the pattern reversed; and Millenials, then between the ages of 31 and 41, saw a median net wealth-to-income ratio of 136%, based on the Federal Reserve’s “Survey of Consumer Finances.”
Most of that wealth gain for Millenials came through housing wealth, which saw a net increase of $45,567 between the years of 2019 and 2022.
Alicia Munnell, who is the director of the Center for Retirement Research at Boston College, and one of the authors of the paper, explains that Millenials were old enough to own homes when the pandemic hit. When housing prices rose, it had a huge effect on wealth-to-income ratios.
“Millennials also were well-positioned to enjoy the gains of the stock market because they tend to invest more in stocks, they’re more likely to have two earners [in their households and] they’re more likely to have fewer kids,” Munnell states. “So that whole package together made their total wealth-to-income [ratio] look much better than earlier cohorts.”
Munnell adds that, when Gen Xers were the age Millenials are now, they were in the middle of the Great Recession, which lasted from 2007 to 2009. As a result, Gen Xers did not experience the same kind of housing and wealth growth that Millenials are now.
The CRR has also found that Millenials’ wealth holdings were not only concentrated among the wealthy but also across the whole wealth distribution. This shows that Millenials in each wealth group are better off than before.
Despite this, the CRR argued that, when it comes to retirement savings, it remains unclear how to access housing wealth. While home equity is an illiquid asset, few take advantage of this asset to support their retirement plans. Instead, many hold on to their housing equity to cover possible long-term care needs towards the end of life, or to pass down their housing wealth to their children.
Additionally, the CRR has noted that current home prices are about 16% above their trend over the past 30 years. This makes it possible that prices will revert to the trend over time.
Millennials also still face more student debt than Gen Xers or Baby Boomers. Based on the Census Bureau’s Current Population Survey, 38% of Millennials had student loans as of 2024, with a median amount of $13,006.
Despite the high levels of student debt and the rocky start Millennials had during the Great Recession, Munnell has stated that this cohort is showing visible improvements. However, it remains unclear whether this will translate to better retirement savings.
