Many Millennials Have ‘Phantom Wealth’ and Are Richer Than They Think
Written by
Chris Adam
Edited by
Molly Sullivan
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Sometimes we may be richer than we feel or think. In the case of many millennials, that may be especially true.
While they may not feel like they’re doing well financially, a closer look at their overall wealth shows a different story. But that wealth may not be in forms that immediately come to mind — and it may heavily depend on their age and location in the United States.
‘Phantom Wealth’
The reason many millennials may be doing better than they think is thanks to “phantom wealth.” That’s how The Wall Street Journal describes the wealth that is put away in illiquid assets like homes and retirement accounts.
Since the stock market and median home prices in the country have been in record-high territory in recent months, the gains have been helping increase the net worths of lots of millennials.
According to an analysis from the St. Louis Fed in early 2024, millennials and older members of Gen Z had about 25% more wealth than previous generations did at the same ages. For older millennials, born in the 1980s, the median household net worth rose to $130,000 in 2022. Median wealth more than quadrupled to $41,000 for those born in the 1990s.
Stocks and Real Estate
Taking a closer look, stocks and mutual funds have played a big role as employees made larger contributions to their retirement accounts earlier in their careers. Based on Federal Reserve data, for the first quarter of this year, the collective wealth of millennials and older Gen Zers was $14.2 trillion. That’s up significantly from $4.5 trillion just four years earlier.
The main driving force has been real estate.
“Millennials’ housing wealth grew $2.5 trillion, after accounting for the additional mortgage debt they took on,” per The Wall Street Journal. “A colossal jump in home prices benefited owners, whether they scraped together a down payment in the early 2010s or squeaked in just before the recent leap in prices and rates.”
Inequality Challenges
The news isn’t all good for younger Americans, particularly with day-to-day financial obstacles.
“Young Americans still face plenty of economic challenges,” according to SoFi. “The millennial generation — which includes people born between 1981 and 1996 — which has worked through both the Great Recession and the pandemic, still faces a host of financial challenges including high debt, a tough housing market, and persistent childcare affordability issues.”
In fact, The Wall Street Journal went as far as to report that it’s not even entirely clear if millennials are better off overall because of the big increases in costs for child care and healthcare. They may also live longer than boomers and will need to make their money last longer.
Then there’s the issue of inequality. In some instances, inequalities have grown. That means disparities along racial and educational lines.
But it doesn’t end there. This “phantom wealth” also is based largely on whether a millennial has student debt, can buy a house or lives in an expensive part of the country. That may be particularly true for younger millennials who didn’t purchase a house before princes surged or those who have delayed saving for retirement.
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