Key Takeaways

KEY TAKEAWAYS

Take Aways - The Graying of Wealth

According to the latest Survey of Consumer Finances, Americans age 75+ have the highest median net worth of all age groups for the first time ever. It’s the culmination of a decades-long trend that has seen older Americans amass a huge relative advantage in wealth over the young.

  • Grandparents have become a lifeline for their grown kids and grandkids.Grandparents (and even great-grandparents) now serve as a vital source of intergenerational support. It’s a hands-on role that the Silent began to assume in the 1990s, when many young families were rocked by divorce or drug abuse, and has been playing ever since. Whether by offering cash, babysitting, or financial advice, older Americans have never been in a better position to help. A recent TD Ameritrade survey reported that grandparents spend an average of $2,383 annually on their grandchildren—an amount that includes household items like clothing and toys along with heftier expenses like college savings and vacations.
  • It’s increasingly evident that our political economy fails to reflect changes in our society. Enshrined in public policy are entitlement programs like Social Security and Medicare, which tax the young to pay for the old. Informally, however, money is more likely to be flowing in the opposite direction: In one Pew survey, more than half (51 percent) of parents age 65+ said they’d given their children money within the past year. Only 14 percent said the reverse was true. With the elderly’s growing wealth advantage, these programs may only be worsening the ever-expanding inequality gap. Yet given the political stature of entitlements, any challenges are sure to cause an outcry.
  • Generational inequity is emerging as a political flashpoint. Feeding the growth of anti-establishment sentiment around the globe are young people impatient for the government to prioritize their generation with future-oriented policies. Class divides are being replaced by age divides. This issue took center stage in Britain’s last election, when Labour Party leader Jeremy Corbyn won strong support among Millennial voters after pledging to abolish university tuition fees and help reduce student debt­. Tensions are also high in Japan, whose aging and shrinking population has spurred major pension reforms meant to slow the transfer of wealth that are set to go into effect next year.