There’s been plenty of debate about the stubborn wealth and income gap in our economy. But according to NYU Professor Scott Galloway, the real chasm isn’t just between the rich and the poor. It’s between the old and the young.
In a recent conversation with Simon Sinek, Galloway proposed the theory that the economic system favors people who were born early enough to accumulate assets such as real estate cheaply, and now enjoy inflated valuations.
This generational divide is the fundamental cause for widespread economic dissatisfaction, according to him.
“Everything we do is ‘how do we buttress the wealth of incumbents and old people and make it more expensive for young people?” he said. “Their housing has gone up 4x, their education has gone up 2x and, on an inflation-adjusted basis, their income has gone down.”
While recent data confirms a wide wealth divide between generations, subtle shifts suggest the gap is starting to close gradually.
Generational wealth divide
As of Q4 2024, baby boomers held 51% of household wealth in America, according to Federal Reserve data. Altogether, their assets were worth $82.48 trillion. By comparison, millennials had just $16.26 trillion in total assets.
This wealth disparity could be the root cause of dissatisfaction for many young Americans, many of whom are now old enough to start families and need larger homes.
At the same time, there are some encouraging signs. Millennials have been accumulating assets rapidly in recent years, as their share of the national total surged from nearly 1% in 2010 to 10% in 2024. Boomers, on the other hand, now see a drop over the same period.
And according to a 2024 Wall Street Journal report, millennials and older members of Generation Z now have 25% more wealth than Generation X and baby boomers did at a similar age, when adjusted for inflation.
Inheritances could be helping some younger people achieve prosperity. According to NorthWestern Mutual, experts predict the Great Wealth Transfer from baby boomers and Gen Xers to their children will be worth $90 trillion.
However, having wealthy parents isn’t the only path to wealth accumulation.
Beating the odds
If you’re a young person in America from a low- or middle-income family, the odds are stacked against you. However, there are ways to beat the system and out-perform your peers in the wealth accumulation race.
Avoiding or minimizing debt could put you ahead of the game. Roughly 97% of retirement-age U.S. adults still have nonmortgage debt, according to a recent retirement study. This includes things like student loans, auto loans and credit card debt. If you can minimize debt during your working years, you could come out on top in retirement.
Another way to beat the odds is to accumulate assets as rapidly as you can. As of January, the personal savings rate is just 4.6%, according to the U.S. Bureau of Economic Analysis. If your debt burden is lower than most Americans, you could afford to set aside more of your disposable income for savings and investments.
By saving slightly more and investing in a low-cost index fund that tracks the broad stock market, for example, you could gain exposure to the country’s most robust wealth creation engine.
Even on a modest salary, saving 10% or 15% of your income and investing in ETFs or stocks could help you accumulate more than $35,649, the median net worth of an American in their 30s, according to Empower.
Finding side gigs or upgrading your professional skills to boost your earnings could be another way to supercharge this strategy.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
