What's New

More In

Why Our Parents Had More Money at Our Age

Laura Shin
Laura Shin
Posted on Nov 11, 2011

Older ParentsAs if the economy hadn’t beaten us down enough.

A new report from the Pew Center shows adults younger than 35 have a lot less money than their parents did at the same age.

Specifically, in 1984, an adult aged 35 and younger, had an average net worth of $11,521. Nowadays? An adult that age has an average net worth of $3,662.

So, in 1984, that age group had more than three times as much money.

The decline is not because every generation is suffering right now. Those 65 and older have more money now than the same age group did back in 1984: Adults 65+ in 2009 had an average net worth of $170,494, while that same group in 1984 had an average net worth of $120,457.

What’s even worse is how the spread between the age groups has grown: Back in 1984, those 65+ on average had about ten times as much money as those 35 and younger. Now, they have 47 times as much money.

So, what’s going on here?

College, Marriage and (Housing) Bubbles

One big reason for this depressing news goes back to that never-ending source of economic woes: the housing bubble.

As the Pew report says, “Older Americans also have been the beneficiaries of good timing, in the form of the long run-up in home values that enabled them to accumulate wealth via home equity. Most of today’s older homeowners got into the housing market long ago, at “pre-bubble” prices—half purchased their present homes before 1986, according to the 2009 American Housing Survey.”

So even though the recent housing bubble burst has hurt everyone, older Americans were able to build some equity beforehand, so they have more of a cushion. Additionally, a majority of them (65%) don’t currently have a mortgage.

Younger Americans, on the other hand, tended to buy housing at high prices, and now that the bubble has burst, their homes are less than what they paid for them.

Aside from housing, younger Americans are also disadvantaged because of two other trends: First, younger Americans tend to start out with more college debt than older Americans did. And second, they tend to marry later, which means they also start to build their wealth later.

Our Takeaway

First, if you’re feeling the pinch financially, take a deep breath and realize you’re not alone.

Second, though we’re not in the luckiest of economic times right now, we have control over our own spending and saving. So, take a look at your budget and your regular expenses and make a decision to make sure your spending lines up with your priorities.

Lastly, remember that just as with everything else in life, things will change. So if you’re in a financial tough spot, buckle down and keep your chin up. And if things are going smoothly for you now, savor it and be prepared for whatever comes next.

Posted in:
  • Michelle D.

    I am a member of the parent generation- and I have to say, in our case, this is wrong. I am a work at home-mother/writer-photographer- have been for over 20 years, two children almost ten years apart. 
    We have never had much in the bank and have learned to live with much less than our friends long ago. Our children, one 28 and on his own currently making more than my husband as a nurse, the other 19, in college, – seem to have the same beliefs we do about living frugally and not worrying about how much money and things they have compared to other people.
    I do believe that many young people have less compared to us in benefit packages and the like at their workplaces. But bank accounts- assets- well, it truly depends who you are talking to. Many of these “older people” who took on mortgages pre-1986 took out second mortgages to fix them up or to help pay for unexpected expenses such as healthcare deductibles or to help care for aging parents or even some, to help pay for their children’s college education! 
    Many in my generation did not help their children who are now grown and trying to make it on their own by allowing them to take on debt for college just to make sure they had a “total” college experience living away from home. (We did not do this for our older son, nor will we for our younger son!) So if some of you have more debt and less assets because of college debt, blame your parents because they never talk to you about how much a “full college experience”would actually cost you and yourself, for being naive about money management! 

    • Fl

      My parents are immigrants that did not go to college themsevles, so for me, going to college and having that experience was part of the so-called “American Dream.”  My parents did not have the knowledge that other parents did.  I thought that going to college would help me land a good job once I graduated.  I can say that I did get an OK job, but living in NYC, I feel that it is extremely difficult to make ends meet on a very low salary.  I know our generation should be “greatful to have a job,” but this just leads the big companies and managers in all sectors of the economy to exploit youth by paying them unfairly low wages, giving them grunt work, and then putting their jobs at jeapordy.

      It’s not just about money and material possesions, practical things like rent, food, utilities; all of these have gone up in price while I and other people in my position have not seen a cost of living raise in years.

  • http://neatfreakwannabe.blogspot.com Jenna

    I definitely feel school is a big factor for my generation.  Not only
    are more people going to college now, but tuition is alarmingly high at
    some schools.  If you foot the entire bill yourself, it can really add up.

    Although my net worth is nothing to brag about, I know I’m doing better than my parents were at my age.  However, they’ve made a lot of good financial decisions since then and have benefited from that.  And so have I, both in the financial knowledge as well as the fact that I’d likely be a little more in debt from school than what I am now.  It’s also comforting to know that if they (with 3 kids) have been able to go from broke to very comfortable, I know that I can go from where I’m at to where I want to be in the future by making the same types of smart decisions they raised me to make.  Thanks Mom & Dad!

  • Frugal Mom

    As a parent, I can tell you that when we were young, we DID WITHOUT a good many things because we could not afford them and we did not expect someone else to pay for stuff for us.  We did not rack up thousands in credit card debt trying to have it all.  It is all about living within your means……..

  • April Hunter

    Our parents didn’t always have two cars. They certainly didn’t have cell phones, cable, netflix, several credit cards and a host of other small payments that add up to hundreds, or thousands each month.

  • Julie

    The scarcity of jobs is another factor, imo. At my age my parents found jobs easily. Plus they didn’t have all the educational loans debts that I have. They received scholarships to get a higher education. Funny, it was that what made me too poor to get out of loans but too “rich” to qualify for a scholarship. Go figure.

  • Disillusioned

    Let’s see…. Gas in
    1984 was about 1.20/gallon, median houses price was about 97K, milk was $2.25,
    and let’s not discount the ’81 and ’86 tax cuts for putting more money in our
    parents’ pockets.   It’s an age-old gripe that “it’s more
    expensive now-a-days”, but let’s face facts: it is.  LOTS more
    expensive.

    We have less net worth now because of the twin evils of inflation and taxes,
    both of which have squeezed every class, but especially the middle classes (the
    poverty classes escape most of the tax burden, and routinely have their
    “benefits” adjusted upwards to escape inflationary pressure… many
    of us who work for a living (especially in the remains of the private sector)
    aren’t so lucky).

    Here, I’ll tell you a little story.  My parents spoke of selling two of
    dad’s corvettes ($5K each) for the down payment on their house ($50k) in
    1976.  Dad was making $8/hr at the time (and bringing home $7.50/hr of
    it).  So, a used corvette was about 10% of a 3 bedroom house.  
    That has sort of stayed the same, now it’s roughly 40K compared to 500K (the price
    for the same house today, your results may vary…), but even though it seems
    like I make LOTS more than my dad, in reality I only make 4x more ($15k a year
    TAKE HOME in 1976 vs $60k TAKE HOME pay in 2012… I “make” a lot
    more, but a lot of other “deserving” folks put their claim on 30-40%
    of it before it trickles down to me).  So, I could not afford the same
    house I grew up in.  Using the same ratio of take-home-pay-per-hour versus
    house price (7.50 vs 50K), I can only afford a 300K house.  Sounds great…except
    the same house is now worth 500K+, so I cannot live like my parents do, where
    my parents do, or with the same quality of life as they raised me in. 
    They were solidly working-class.  Dad worked as a machinist, Mom as a bank
    teller.   There is NO way a 25 year old machinist and his young wife
    could afford a half-million dollar house today (and yet those are the prices
    for 3 bedroom ranches in such wonderful places as New Jersey, Chicago, Boston,
    California, Seattle…).

    So, I say, you want to point fingers at why our finances suck?  Sure, we
    have iPhones and Netflix and that death-of-a-thousand-cuts monthly fees 
    (our parents had phones and cable too you know), but the real culprits sit in
    our State capitals and our National capital and legislate us out of prosperity. 
    They ruin our money with inflation, they debase our workforce with illegal
    immigration, destroy our housing market with vote-buying regulations and
    Section 8 housing, and they reward themselves with thousands in bribes (sorry,
    “campaign contributions”) to make lightbulbs illegal, swamps more
    important than homes and wide open ports for Chinese slave-labor crap. 
    They determine what the money is worth, not us, not some mysterious “free
    market”.  So, if your dollar doesn’t stretch as far as it did last
    year, it’s not because you didn’t work as hard, it’s because some bureaucrat in
    Washington formulated some point of policy that made it so, to pay back some
    contributor to his boss’ campaign