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THE RISE OF THE OLDER MILLIONAIRE: A NEW ECONOMIC REALITY

Wealth Concentration Among Older Generations Shapes Economic Landscape

18.06.2024
BY WILHEMINA BOWEN
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In today's economic landscape, the financial power of the older generation is more pronounced than ever. In the United States, individuals over 60 now account for half of the country's combined net worth. Across the Atlantic, in the United Kingdom, this demographic holds a staggering 78% of the nation’s private housing wealth.

The term "geriatric millionaires" might seem harsh, but it captures a significant shift in wealth distribution. According to Business Insider, the average age of an American millionaire has increased to 61, up from 57 in 1992. This shift indicates a longer journey to financial success and a growing reliance on inherited wealth.

The Wealth Accumulation Challenge

Several factors contribute to this trend. Firstly, it appears to be increasingly difficult to become a self-made millionaire. The economic landscape has changed, with higher barriers to entry in lucrative markets and a competitive global economy. As a result, many individuals are reaching millionaire status later in life.

The increasing age of millionaires reflects broader demographic trends. The average age of the population is rising, and people are living longer, healthier lives. However, the more significant factor is the delayed wealth transfer within families. Wealth is being passed down later, from nonagenarians to their children who are already in their 60s.

Chuck Collins of the Institute for Policy Studies encapsulates this shift: “Instead of 60-year-olds giving to 30-year-olds, it’s going to be 90-year-olds giving to 60-year-olds.” This delayed inheritance affects economic dynamics, with potential implications for investment, spending, and economic growth.

Inherited Wealth and Economic Implications

The prevalence of inherited wealth among the super-rich has also increased. A third of the individuals on the Forbes billionaire list inherited their fortunes, compared to just five out of 490 in 2001. This rise in inherited wealth highlights the growing challenge for those striving to accumulate wealth independently.

In the UK, the wealth concentration among older generations is particularly stark in the housing market. With 78% of private housing wealth held by those over 50, younger generations face significant hurdles in property ownership. Despite a record number of under-30s earning over £1 million annually, the disparity in wealth distribution remains a pressing issue.

Future Economic Considerations

The concentration of wealth among the older population has far-reaching consequences. It affects economic mobility, with younger generations finding it harder to break into the millionaire club. This wealth disparity can lead to reduced economic dynamism, as younger individuals have less capital to invest in new ventures and innovations.

Addressing these issues requires targeted policies to promote wealth distribution and economic opportunities for younger generations. Encouraging entrepreneurship, improving access to education and training, and reforming inheritance tax laws could be part of the solution.

As society grapples with these challenges, the need for a more equitable economic landscape becomes clear. Ensuring that wealth is more evenly distributed across all age groups is essential for fostering a vibrant and dynamic economy for the future.

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