The golden years have never glittered so bright, according to a recent MagnifyMoney analysis of Federal Reserve data that revealed baby boomers possess a much higher net worth than Americans in their age group 20 years ago.
Meanwhile, todayâ€™s millennials lag a little compared with their counterparts in 1998. In short, todayâ€™s baby boomers (ages 52 to 70 in 2016) are rolling in wealth while young adults struggle to stay above debt.
A personâ€™s net worth is all their assets minus any liabilities. Net worth paints one of the most accurate portraits of someoneâ€™s financial health since it takes into account looming obligations like student or credit card debt, as well as assets such as home equity, investments and savings.
|Examples of Assets||Examples of Liabilities|
|Investments in stocks and bonds||Credit card debt|
|Car (owned, not leased)||Student loan debt|
|Cash value of whole life insurance||Medical expenses|
Youâ€™ll notice that although assets help boost your net worth, not every asset is easy to convert into cash.
For example, if you own a car (or a plane or a yacht), it counts as an asset because, in theory, you can turn it into money should the need arise by selling it. But as anyone who has ever tried to sell a used car or even a house can attest, what the market will give you for the asset may not be what you expected. Not to mention an asset such as your vehicle or house fulfills a vital need (like getting you to work or providing you shelter) that youâ€™ll have to satisfy one way or the other. Nonetheless, experts classify the value of these not-too-liquid sources of wealth as assets.
While oneâ€™s net worth can fluctuate dramatically depending on life events (think of all the debt assumed by taking out a mortgage on your first home or from student loans), the overall trend serves as a good measure of how well someone is meeting their financial obligations. Hereâ€™s the current breakdown of assets and liabilities for each of the age groups examined:
For todayâ€™s millennials, liabilities such as debt are about 44% of their assets. While Gen Xers have a greater amount of liabilities, they also have more assets, so liabilities are only roughly 24% of their assets. Boomers have the most advantageous ratio of liabilities to assets, with liabilities at only about 8% of their assets.
MagnifyMoney examined the most recent Federal Reserve data on household assets and liabilities and estimated the average increase in household asset and liability data based on economic data from the Federal Reserve and the Federal Deposit Insurance Corp., as of March 2019. Values for all dates are in inflation-adjusted dollars.
This Cash Back Number May Surprise You
Best Travel Credit Cards With No Annual Fee
Getting Approved For 1 Of These Credit Cards Means You Have Excellent Credit
Credit Cards Charging 0% Interest until 2021