The COVID-19 pandemic altered the landscape of the U.S. economy. Significant government relief and rock-bottom interest rates helped households build wealth, even as an inflation spike eroded their money’s real value. In the first quarter of 2020, U.S. households’ total wealth equaled $103.99 trillion, but that figure spiked to $141.10 trillion in the first quarter of 2022.
As a generation, millennials born between 1981 and 1996 (ages 26 to 41 in 2022) have benefited financially since the start of the pandemic, more than doubling their net worth. While they still lag behind older generations — particularly baby boomers and Gen Xers — millennials are starting to build long-term wealth, particularly through real estate ownership.
In the first quarter of 2020, just as the coronavirus pandemic started to upend American life, millennials collectively held $4.55 trillion in net worth. Two years later, millennials have more than doubled their net worth to $9.38 trillion.
“The COVID-19 pandemic has changed the way people spend money, and savings rates have skyrocketed,” according to MagnifyMoney executive editor Ismat Mangla. “Millennials are no exception. They’re also savvy when it comes to investing and compounding their earnings.”
Millennials are starting to build wealth as they become more established in the workplace, Mangla says.
Between increased earnings and support from pandemic-era government policies like expanded unemployment insurance and a pause on student loan payments, millennials have built a lot of wealth over the past two years.
Based on 2020 population figures from the U.S. Census Bureau, MagnifyMoney estimates millennials’ average net worth was $62,758 in the first quarter of that year. Using 2022 population estimates, that figure grew to $127,793 in the first quarter of 2022 — more than double the average from the first quarter of 2020.
That millennial net worth average is still much lower than the average net worth among older generations. Gen Xers (ages 42 to 57 in 2022) own $647,619 on average, and baby boomers (ages 58 to 76) own $1,021,264 on average. While millennials have doubled their net worth over the past two years, their wealth is still a fraction of what their older counterparts have.
Homeownership has been a successful strategy for building long-term wealth for generations, and millennials are no exception. Most of their wealth is held in real estate — homes and other properties — but they also hold wealth in consumer durables, which include cars, furniture and other household goods that have a longer lifespan.
Real estate can help explain why millennial net worth has risen during the pandemic.
“Millennials who were lucky enough to secure mortgages when interest rates were at historic lows have a significant leg up,” Mangla says. “As they pay down their mortgages, they build their net worth by accumulating equity in their homes.”
However, millennials who recently bought homes tend to have significant debt. Most of the debt owed by millennials (62.6%) is tied up in home mortgages, according to the Fed. Among other categories it tracks, consumer credit is also a big source of millennial debt (35.6%). Other liabilities totaled just 1.7%. Perhaps that debt burden is a big reason why 28% of millennials still receive financial support from their parents.
Even though Gen Xers have more debt across all categories than millennials, millennials hold the most consumer credit debt ($1.85 trillion) of any generation. No other generation has more than 22.0% of their overall debt in consumer credit. Some examples of consumer credit include car loans, credit cards and personal loans.
Even though millennials have doubled their wealth during the pandemic, older generations still own most of America’s wealth. Baby boomers have more than half of the country’s wealth (50.4%), Gen Xers have 29.9% and the silent generation and those born earlier — which include those 77 and older in 2022 — have 13.1%. Millennials have just 6.6%.
To explain the massive wealth disparity between older and younger generations, Mangla calls it a “perfect storm for building incredible generational wealth.”
For baby boomers, they benefited from low housing costs, reductions in tax rates for high-income earners, a booming stock market, affordable education and low interest rates. Then they saw the values of their homes rise due to housing inflation.
Of course, baby boomers and other older generations also have had more time to build their wealth. While millennials have experienced economic headwinds, the bump in their collective net worth over the past two years is a positive sign.
Millennials have made up some ground recently, as their net worth grew the most relative to other generations from the first quarter of 2021 to the first quarter of 2022 (47.5%). But, they still have a long way to go to catch up with older generations. Mangla says there’s no secret to wealth-building.
“The best ways to build wealth are to keep expenses low, find ways to increase your income — whether it’s through higher-paying jobs or side hustles — and invest that delta smartly for the long term.”
One smart investment may be real estate, though home prices have hit record highs and interest rates are rising quickly. Beyond that, millennials can contribute to tax-advantaged retirement savings accounts to help build wealth over the next few decades.
MagnifyMoney researchers analyzed Distributional Financial Accounts (DFA) data from the Federal Reserve, focusing on millennials. The DFA measures wealth as assets minus liabilities. That’s the same calculation for net worth, so the terms are used interchangeably here.
Analysts then used the DFA and U.S. Census Bureau population data to estimate the average net worth of millennials.
We defined generations as the following:
Researchers also estimated average net worths among Gen Xers and baby boomers.