Why Gen Xers and millennials are less likely to become millionaires

Good news for the industry right now: 1 in 7 of those over 62 has net wealth over $1 million and disposable income to spend on items like boats.

The bad news? Later generations have a lot less money —  and probably will for their entire lives.

That’s according to a new paper from the St. Louis Fed’s Center for Household Financial Stability, as reported by the Washington Post’s Wonkblog:

Basically, young people have always been poor. But looking beyond that basic trend, you can see that today’s young people are poorer than young people of the past. …

In just 25 years, the wealth gap between young and old people has yawned wider. In 1989, old families had 7.6 times as much median wealth as young families. By 2013, it had grown to 14.7 times.

According to the economists’ calculations, someone born in 1970 has a quarter less income and 40 percent less wealth than an identical person born in 1940.

It’s not clear exactly why this is, the economists say. The financial crisis and Great Recession certainly set young people back, but young people were doing comparatively worse even before that. And the trends are true even though America’s younger generations are its most educated ever.

Gen Xers have been hit especially hard by these trends, the authors say. Millennials are also behind earlier generations, but they say it is too early in their earning years to draw solid conclusions.

The study’s authors point to a number of reasons for the shift from increased global competition, higher debt for Gen Xers and Millennials and increased diversity.