Americans age 70 and older experienced a significant surge in their collective wealth during the COVID-19 pandemic. According to findings from the Federal Reserve, this group, which makes up just 11% of the population, has accumulated over $14 trillion in extra net worth since the end of 2019. Their share of the country’s wealth also rose to a record 30% last quarter. This surge in wealth can be attributed to several factors, including the aging population and the increase in home values and stocks during the pandemic.
Contributing to this wealth gain are the older baby boomers who are most likely to hold equities or mutual funds and own a house or two. Despite being mostly retired, a rising percentage of individuals aged 70 or older are still employed nowadays. Although the percentage of adults age 65 and over in the labor force hit an all-time low of 10% in the mid-1980s, this figure has more than doubled since then, according to Bureau of Labor Statistics data.
Compared to 2019, Americans aged between 40 and 70, generally the years when people earn the most money, have a smaller share of household wealth. The latest figures show that older Americans’ collective wealth has increased six-fold to $43.3 billion over 25 years, indicating a substantial increase across a more extended period. The same data set reveals that the wealth of those under the age of 55 has, over the same period, only grown two-and-a-half times.
During the pandemic, older Americans also gained significantly from the timing of the stock market, even with the ups and downs of the economy. Older Americans’ collective equity gains are estimated at about $5 trillion since 2019. Close to 38% of the nation’s corporate equities and mutual fund shares were owned by individuals aged 70 and over in Q3, the most substantial portion on file dating back to 1989.
The prolonged wealth gain among older Americans, due to the surge in the stock market and property values, has resulted in a significant transfer of wealth. The divide between the wealthy seniors and younger Americans will likely widen even more in the future.
The pandemic has exposed such disparities in wealth accumulation. While the continued upward trend in older Americans’ wealth is a source of relief, it is a worrying trend that younger people, although making efforts, are still struggling to make headway in building up their wealth.
