Reply to Boomers' Billion-Dollar Bonanza: The Unseen Hoarding Behind Millennial Struggles

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]https://fortune.com/2023/10/28/great-wealth-transfer-baby-boomers-bank-of-america-millennials-government-policy/amp/

Wow, I just came across this shocking article from Fortune which reveals that the so-called "great wealth transfer" is not the $72 trillion we've been hearing about, but rather a whopping $129 trillion. And guess where most of it went? Yup, straight into the pockets of baby boomers, thanks to government policies over the last 40 years.

We've all heard about the economic challenges millennials face today, especially with the housing market and student debts. But to think that the government has been so instrumental in enriching an entire generation, predominantly boomers, is mind-blowing! This massive wealth transfer is arguably a result of policies from when boomers were in their prime working years. The research shows that two-thirds of the current U.S. household net worth (around $146 trillion) is held by boomers and "traditionalists."

What's even more shocking is that while millennials struggle with high-interest rates on mortgages, most boomers were able to lock in at a low 3% rate. We often hear about boomers giving financial advice to younger generations, but it's evident they had a huge leg up due to these policies.

It's time for a change. Millennials and Gen Z are battling a completely different economic landscape, one that has been significantly shaped by previous generations. While there's hope that a pending wealth transfer might offer some relief, current projections don't seem as promising as what boomers enjoyed.

Thoughts? How do we bridge this generational wealth gap? It's evident now more than ever that we need a system that supports all generations equitably.[/quote]

Boomers paid 12 and 13% mortgage interest rates for years.[/quote]

On homes that cost less than 100k. And salaries increased over the course of their mortgages.

In 1985, median salary was $24k, median home price was $84k, mortgage rates were about 12.5%. College debt was rare.

Let's say you graduate from college at 22 and get a job making 18k. You live cheaply (rent is cheap) and work for 4 years, saving money. In 1985, at age 26, when you are now making 20k, you get married and buy a small starter home for 55k, putting down 10k (just shy of 20%). Your rate is 13% on a 30 yr loan because you're a first time buyer with okay credit.

Monthly income: $1,666 before takes. Monthly mortgage cost: $500. Tight, sure.

But that mortgage would still be $500/mo 20 years later when the boomer is making 3-4k per month. Or more. Millenials have not seen similar gains in salary. And they are more likely to postpone buying a house in order to pay off their college debt. Plus the higher cost of housing means much larger down payments, even just to put down 8-10%. So yes, Millenials have had much lower rates, but that does not mean it has been easier for them to purchase homes, or that their salaries have risen to help them afford mortgages at these lower rates.

Low rates can help first time buyers but they are actually most useful for people who already own homes, who can refinance to the lower rate. Boomers and Gen X who already owned homes probably benefitted most from the low rates of the last 10-15 years, because they already owned homes purchased when housing costs were much lower, plus could refinance down to dirt cheap rates.[/quote]

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