Wealth Is Distributed Extremely Unevenly Within Every Age Group

On Thursday, the Federal Reserve released the 2013 Survey of Consumer Finances. On Friday, I calculated the racial wealth inequalities that show up in the survey data. Here, I cover wealth inequalities across age groups.

Whenever wealth inequality is brought up, one common response is that wealth inequality is really just about age and the life-cycle. When people are young, they have very little wealth. By the time they retire, they will have had a lifetime to save up and have much more wealth. Accordingly, a snapshot of wealth inequality across the entire society is not necessarily capturing anything more than the fact that young people are less wealthy and old people are more wealthy.

Wealth Distribution Among Age Groups

When you look at the summary report the Federal Reserve puts out from the 2013 SCF data, you can certainly understand why someone would make this wealth life-cycle point.

Here is mean wealth broken down by age group:

The below-35 age group is the least wealthy and has a mean net worth of $76k. From there, it just goes up and up, topping out in the 65-74 age group at $1.06 million.

Here is median wealth broken down by age group:

These median wealth figures tell the same story as mean wealth. The below-35 age group has the lowest median wealth at $10k. The 65-74 age group has the highest median wealth at $232k.

Wealth Distribution Within Age Groups

These overall figures are striking, but they are not adequate for determining whether wealth inequality is really just a life-cycle phenomenon. To get at that question, you need to delve into the SCF microdata and see what wealth inequality looks like within age groups.

Here is the most helpful graph on this question (it's complicated, so I'll explain below):

What I have done is taken each age group and broken them up into three sub-groups. The first sub-group (blue), titled "P0-P50" in the graph, is the bottom half of the families in that age group (percentile 0 to percentile 50). The second sub-group (orange), titled "P90-P100" in the graph, is the top 10% of families in that age group (percentile 90 to percentile 100). The third sub-group (red), titled "P50-P90" in the graph, is everyone in between the other two groups (percentile 50 to percentile 90).

With those three sub-groups defined, I then calculate what percentage of all of the wealth contained in each age group belongs to each sub-group. So, for instance, the orange bar furthest to the right goes up to 68%. That indicates that the wealthiest 10% (P90-P100) of those in the 75+ age group own 68% of the wealth contained in that age group.

The blue bar furthest to the left, you'll notice, says -8%. This indicates that the least wealthy half (P0-P50) of those in the below-35 age group are actually net debtors. They have an overall negative net worth and therefore own a negative percentage of the net worth contained in the below-35 age group.

Beyond those particulars, what you see here is that wealth inequality is actually pretty constant and persistent across every single age group. In all age groups, the bottom half owns between -8% and 6% of that age group's wealth. In all age groups, the top 10% owns between 68% and 82% of that age group's wealth.

Wealth Inequality Within Age Groups By Dollars

The above graph uses wealth shares, which are the most helpful for cross-group comparisons. But wealth shares can be a bit too abstract for some.

So here is the same basic data from above, this time represented in actual dollar figures:

It's hard to make out anything but the orange in this graph to much precision. So here is the same graph with the top 10% taken out:

In these graphs, you can see the basic outline of the stratification present in every age group. In all age groups, the top 10% own a massively higher amount of wealth than everyone else.

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