Growing Wealth Gap between Young and Old

Americans aged 65 or older are the beneficiaries of a growing share of the nation's resources, studies show, while children must make do with less. A paper published in Demography takes a look at the consequences of this disparity, and the results are troubling. Analyzing Survey of Consumer Finance data from 1989 to 2013, researchers Christina M. Gibson-Davis and Christine Percheski compare the wealth, income, assets, and debt of two types of households—those with children under age 18 (child households), and those with a householder or spouse aged 65 or older and no children under age 18 (elderly households).

Not surprisingly, elderly households have much greater wealth than child households, which is to be expected because older householders have had more time to accumulate wealth. The trouble lies in the growing gap between the two types of households. "In 1989, elderly households had a median net worth that was approximately 3.8 time that of child households ($106,647 vs. $27,889)," say the researchers, "by 2013, their median net worth was 12.5 times as high ($154,998 vs. $12,413)." Other findings:

• The median net worth of elderly households grew 45 percent between 1989 and 2013, after adjusting for inflation, while the net worth of child households fell 56 percent. 
• The median income of child households fell 1 percent between 1989 and 2013, while the income of elderly households increased 29 percent.
• The median assets of child households grew only 13 percent during those years while their median debt climbed 68 percent—from $29,915 to $50,300. The assets of elderly households grew by a much larger 75 percent, and their debt grew from a median of $0 to a modest $900.
• The homeownership rate of child households fell 2.6 percentage points between 1989 and 2013, and their home equity dropped 28 percent. The homeownership rate of elderly households climbed 10.8 percentage points and their home equity increased 28 percent. 

"The declining absolute and relative wealth holdings of most families with children is likely to impede the human capital development of the next generation of Americans," the researchers conclude. "We posit that such underinvestments in children are likely to have negative long-term societal consequences for the United States."

Source: Demography, Children and the Elderly: Wealth Inequality among America's Dependents ($39.95)