A recent study highlights the significant wealth gap between rich millennials and the rest of their generation, creating tension and resentment. While most millennials struggle with student debt, low-wage jobs, unaffordable housing, and low savings, the millennial elite are surpassing previous generations. The top 10% of millennials have more wealth than the top baby boomers did at the same age, despite the average millennial having 30% less wealth than baby boomers at age 35. The study emphasizes the diverse experiences within the millennial generation, with some individuals thriving while others struggle.
Millennials, currently between the ages of 28 and 43, have faced financial challenges such as lower homeownership, high debts, unstable jobs, and delayed family formation. The top 10% of millennials have benefited from skilled jobs that offer greater rewards, resulting in increased wealth compared to baby boomers with similar trajectories. Additionally, many millennials may receive inheritances as part of the “great wealth transfer” from baby boomers, which is estimated to be between $70 trillion and $90 trillion over the next 20 years. This transfer of wealth could further exacerbate tensions between different classes of millennials.
As wealth from baby boomers begins to trickle down to millennials, tensions between different classes within the generation may increase. Social media displays of wealth by wealthy millennials could contribute to an intra-generational class war, leading non-wealthy millennials to overspend to keep up. A survey found that a significant portion of affluent millennials admit to buying items they cannot afford to impress others and funding their lifestyles with credit cards or loans. This behavior, driven by social pressure and perceived status, could shape attitudes toward wealth among millennials in the future.
Moreover, the rise in inherited wealth among millennials is creating a lucrative market for wealth-management firms, luxury companies, travel firms, and real estate brokers. Luxury real estate brokers like Clayton Orrigo have seen a surge in business from moneyed millennials accessing family trusts to purchase multimillion-dollar properties. Orrigo specializes in working with the wealthiest families in the world, building relationships with family offices and trusts to cater to their real estate needs. The extreme wealth behind these young buyers underscores the growing influence of inherited wealth in shaping the lifestyles and spending habits of affluent millennials.
The shift towards inherited wealth among millennials is a departure from the traditional American narrative of self-made millionaires and billionaires. While self-made wealth has dominated for decades, the rise of inheritances among newly minted billionaires suggests a changing landscape. Wealth management firms like UBS anticipate a significant acceleration in the great wealth transfer as baby boomers age and pass down their assets to millennial heirs. The dynamics of wealth transfer and the emergence of a new class of affluent millennials could reshape societal attitudes and behaviors surrounding wealth acquisition and distribution in the future.
