Recent Federal Reserve data showed Gen Xers, which the U.S. central bank defines as those currently between the ages of 40 and 55, passed a major milestone late last year: Their share of household net worth, at 26.9%, passed the generation’s roughly 26.8% share of households.
A byproduct of population aging as the World War Two-era Silent Generation and the boomers who followed both decline as a share of households, the shift nonetheless marks a passing of the torch of sorts. In short, Gen X is now the ascendant generation, in terms of wealth.
Moreover, Gen Xers are emerging from the pandemic more flush than when it began, and with most of them still looking ahead to two more decades of peak earnings.
At the start of the Trump administration in 2017, the 34.6 million households headed by a Gen Xer held just 17.4% of household net worth. That had jumped to 25.4% by the end of 2019, and continued expanding during the pandemic, according to quarterly Fed data that estimates the distribution of assets and liabilities among households by race, age and education.
Boomers still hold more than half of U.S. household net worth, at around 52.7%, well above their roughly 33% of households. But that figure peaked at 55.8% in the fall of 2016, fell nearly half a percentage point in 2020, and will likely continue dropping.
Millennials, considered those aged 24 to 39 at the end of last year, still own less than 5% of household net worth despite accounting for nearly 30% of households, the Fed data showed.
The data begins to answer questions about how the wild swings in stock prices, a resilient housing market, and massive federal pandemic-related aid in 2020 changed the distribution of wealth in the country.
Some trends continued as the richest households expanded their share of wealth; but the bottom got a little too, and data by race indicate the country avoided backsliding even as Blacks and Hispanics faced disproportionately heavy job losses.
The top 1% of households added $4 trillion and nearly half a percentage point to its share of total net worth. By the end of 2020, the roughly 1.29 million households in that group owned 31.4% of the stocks and real estate and other assets held by households, less the amounts owed for mortgages and other debts, compared to 31% at the end of 2019.
Though its holdings were far smaller, the bottom 50% saw its share of net worth grow from 1.8% to 2%, largely on the basis of an increase in real estate and pension holdings, including from tax-deferred 401(k) retirement savings accounts, that boosted the group’s net worth by $470 billion.
There were offsetting declines in the portion of household net worth held by the 50th to 99th percentiles, even though both the bottom and top halves saw an increase in the value of their holdings minus their liabilities.
Holdings on the basis of race were relatively unchanged, showing little progress in narrowing wealth inequality based on racial lines, something that has become a core social issue for the United States. At the same time, that data indicated the pandemic did not cause a dramatic setback on that front.
Since the calculation of net worth includes things like credit card debt, that could reflect the influence of federal unemployment assistance and other payments that led some households to reduce loan balances and add to savings.
For Blacks and Hispanics, the gap between their shares of net worth compared to their shares of households in the population narrowed slightly during the pandemic, while the comparative surplus held by white-headed households declined slightly.
The gaps remained large, however.
Black households began the pandemic year with 4% of U.S. household net worth while comprising around 14% of households, and ended it slightly higher at 4.1%. The Hispanic share, at 2.4% of household net worth compared to around 9.3% of households, did not change.
The net worth of the average white family remained about four and a half times that of the average Black family, and five times that of the average Hispanic family.
Wealth gaps based on education continued to widen. Of the $11 trillion added to household net worth over the past year, a figure driven by gains in financial investments as well as real estate, more than 81% went to families headed by someone with a college degree. Those households are a growing share of the population, but still only account for 36.7% of the total, according to the population estimates used by the Fed.
The share of net worth held by households headed by college graduates was 71.8% at the end of 2020, 1 percentage point higher than in 2019.
The population data was most recently updated as of the second quarter of last year.