U.S. citizens born in the 1980s are at substantial risk of accumulating less wealth over their life spans than the members of previous generations, according to a study by U.S.-based Federal Reserve Bank of St. Louis.
Based on the experience of earlier generations at the same age, the wealth accumulated by people born in the 1980s in 2016 are 34 percent below the benchmark level, the worst of all the six age groups being studied. The other five groups are people born between the 1930s and 1970s.
The report attributed the millennials' money woes to the Great Recession between 2008 and 2009. Coming of age during the recession, the 1980s were faced with high unemployment rates, an increased cost of living, and mounting debts.
"Not only is their wealth shortfall in 2016 very large in percentage terms, but the typical 1980s family actually lost ground in relative terms between 2010 and 2016, a period of rapidly rising asset values that buoyed the wealth of all older cohorts," says the report.
Unlike their elders, the 1980s were too young to be home owners during the housing bubble; in fact only 19 percent of 1980s families were homeowners in 2007. So they received no leveraged wealth boost like that enjoyed by older generations.
As a result, the 1980s cohort was unique in falling even further behind its wealth benchmark between 2010 and 2016.
"Give prospect of lower asset returns in the future than in the recent past, 1980s family face a formidable challenge in building wealth rapidly enough to reach benchmark levels set by earlier generations," according to the report.
However the report says it is far too soon to conclude that the 1980s will become a lost generation for wealth accumulation. There are grounds for optimism: The 1980s are still young and are the most highly educated generation in the study.
"It is possible that the income and wealth trajectories of this generation will be steeper than those of earlier generations, allowing many families to achieve their wealth goals in the end," the report says.