The pandemic has caused the wealthy to change their lifestyles and reassess their priorities, altering how they perceive wealth in the procedure, a new report by Boston Private found. The report titled the Why of Wealth, surveyed high net-worth individuals with a minimum of $1 million of assets. Millennials, who turn ages 25-40 this year, altered their perceptions of wealth the most.
More than 3-quarters (89 percent) said the pandemic changed the way they define wealth. The generation was most probably to say the pandemic shifted their wealth priorities and their emotions about wealth, with 85 percent of respondents feeling this way about every change. Gen X and Z felt the same, with 3-quarters of every cohort recognizing in the same way for these sentiments. However, it is a sharp contrast between baby boomers and the silent generation.
Less than a quarter (24 percent) of both generations combined said the pandemic changed their perception of wealth. The report attributes this to their age, as they have experienced important cultural milestones and being more settled into a specific mindset. More millennials relate wealth with happiness and success, whereas boomers and the silent generation can view wealth as peace of mind and independence.
For these young generations, wealth is a key contributor to making a comfortable, happy life, is directly related to achieving necessary goals, having a good family life, and being a positive contributor to community and society, the report reads. Old generations feel less capable of using their wealth on enjoying life as much as they did right now, as per the report, whereas young generations are likely using their wealth to enjoy life more than they feel they need to.
Despite making up a large portion of the workforce, millennials-controlled 4.6 percent of United States wealth through the first half of 2020, as per data from the Federal Reserve.
Baby boomers’ control over 53 percent of the country’s wealth,
while Gen X accounts for over 25 percent, and the silent generation holds about 17 percent, as per the Fed’s data,
which breaks down United States wealth in the starting of 2020 by age, class, race. While it isn’t abnormal for old generations to be wealthier than young generations. They have had long to earn money and accumulate assets, after all the Fed’s data shows that millennials have far less wealth than boomers did at the same age.
Looking back 5 years, in 2016 the average older millennial was 32, earning a median income of $57,500 and had a net worth of about $27,900. But based on wealth rates previous generations recorded at the same ages, the usual millennial needs to have been earning a median salary of $65,900 with a net worth of about $46,600 in 2016, as per calculations by the St. Louis Fed’s Institute.
Millennials Economic future
Millennials face the most uncertain economic future of maybe any generation in America since the best Depression. 3 decades of stagnant wages were followed by the best Recession (which leftover 15 percent of those in their earlier 20s out of work), and the income and the net worth gulf between the rich and the middle class is at its high level since 1941.4 Though the job market has improved in recent years, millennials face wage stagnation due to decreasing labor market mobility. Labor market mobility began to stagnate in the year 2000, as the oldest millennials were entering the job market.
When workers do not move around, both from job to job and from region to region, employers have more power when negotiating wages, a phenomenon is known as monopsony which translates into employees getting paid less.
Unfortunately for younger people whose careers coincided with this trend, it is tough to make up lost earnings from earlier, slow years. The effect of initially low earnings is compounded when subsequent raises are low and people are less capable of saving and invest in ways that will offer income in the future.