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Pew: Old Families Getting Richer, Young Families Getting Poorer

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Many families are struggling in this jobless recovery, but young ones may be struggling a lot more than older ones. According to a study released recently by the Pew Research Center, the average family headed by a senior citizen are 42 percent wealthier now than older families were in 1984.

Meanwhile, young families are getting poorer. The average family headed by someone under the age of 35 is now 68 percent less wealthy than families of similar ages were in 1984.

Pew’s data summarizes all wealth, which means total assets minus debt. The numbers hold up when looking at raw dollar amounts, Pew found. The average family headed by a senior citizen now has $170,494 in net wealth, compared to $120,457 among families of similar ages in 1984.

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Younger families are headed in the opposite direction. The average family headed by adults under age 35 had $11,521 in assets in 1984. Today that has dwindled to $3,662.

Put another way, in 1984 the average older family had ten times more assets than the average young family. Today that gulf has widened, with the average senior family owning 47 times more.

The Pew center points out a variety of possible explanations for this widening gulf. Younger families’ assets have been hurt because many people are taking longer to find jobs and get married, two big boosts to wealth. Younger families also carry more college debt, and many of them are saddled by inflated mortgages on homes bought during the housing bubble.

And it’s not as though older Americans are doing better because they’re lazy fat cats. More senior citizens are working, the report points out. Older families also lucked out when it came to their homes, buying before the mortgage bubble inflated the value of their primary asset.

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The trend of younger families having less money transfers carries over to debt, too. In 2007, the last year for which data is available from the Federal Reserve, fewer families with seniors as heads of household had debt than younger families. Among families led by seniors between the ages of 65 and 74, just over 65 percent had any kind of debt (although that percentage was steadily rising; in 1989 just less than half of families in this age bracket had debt).

For seniors above age 75, the ratio of families with debt dropped to 31 percent.

In all other age groups, more than 80 percent of families had debt. The ratio was highest among people aged 45 to 54, in which 87 percent of families had debt.

The numbers are even more telling when one considers how much debt people have in actual dollars. People over age 75 had the least, with a median household debt of $13,000.

Households headed by people between the ages of 35 to 44 had the highest debt levels, and it was rising fast. The median debt for families in that age bracket was $106,000, more than twice what it was in 1989, when the average household in that age range owed $48,000.

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