The inflation-adjusted average net worth of households headed by someone age 40 or under was around $174,000 at the end of 2019. That number grew by $85,000 to hit $259,000 by the end of 2023, CAP found.
Record-high inflation and rising interest rates throughout 2022 took a bite out of the under-40 group’s wealth, which peaked at over $280,000 in the first quarter of that year. But compared with where it was before the pandemic, young Americans’ wealth appears to be on the come up, per CAP’s analysis.
Struggles to buy homes, pay off student debt and save for retirement have plagued many millennials’ and other young adults’ financial outlooks since they entered adulthood. But now, as the bulk of the millennial generation enters their mid-30s, they seem to be catching up.
The surge in young Americans’ wealth comes from a combination of factors, CAP found.
Here’s how much the average value of each asset owned by Americans under 40 grew between 2019 and 2023:
- Housing wealth (home values minus mortgage debt): $22,000
- Liquid assets (bank deposits, money market mutual funds): $9,000
- Personal business value: $10,000
- Assets (stocks, mutual funds): $31,000
- Durable goods (cars, appliances): $7,000
Additionally, these young households saw their average non-housing debt, including credit card balances and student loans, drop by $5,000, helping give their overall net worth a boost.
Growing home values helped under-40 homeowners’ wealth blossom in the four-year period. But the homeownership rate among people under age 40 also grew by an average 1.5 percentage points between 2019 and 2023, according to Census Bureau data.
While some of the effects of the pandemic, like the student loan payment pause and canceled travel and entertainment agendas, may have helped young adults pay down debt and boost their cash savings, the pandemic also triggered a brief but sharp recession that saw the market decline and millions of workers laid off.
Government intervention helped prevent the recession from lasting long, but few could have predicted the rapid recovery consumer wealth experienced compared with other recessions. Millennials have recovered faster and stronger from the Covid-19 recession, during which they were in their 20s to 40s, than older generations did during previous recessions when they were in their late 20s to early 40s, CAP found.
Baby boomers, who were ages 26 to 44 at the start of the 1990 recession, only saw their wealth increase by 46% four years later, when adjusted for inflation, according to CAP. Gen Xers, who were ages 27 to 42 at the beginning of the Great Recession in 2007, only saw their wealth grow by 4% four years later, though that recession was the longest of the three mentioned.
The Covid-19 recession was notably shorter — officially lasting just two months, according to the National Bureau of Economic Research — than both recessions of 1990 and 2007, which perhaps helped millennials’ wealth bounce back so significantly. The average wealth among millennials increased by around 101%, after adjusting for inflation, between the end of 2019 and the end of 2023.
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