Millennials are 300% richer than they were in 2016, but there’s a catch

In a shocking twist, Millennials are richer at their age than their Baby Boomer parents were.

Analyzing Federal Reserve data, The Wall Street Journal reported that the average household wealth of Millennials has grown by a staggering 300% since the first quarter of 2016. Millennials now have $14.21 trillion in accumulated wealth, or 9.4% of the nation’s total.

Although Baby Boomers own the lion’s share of the nation’s wealth ($78.55 trillion), the value of their assets grew by around 70% over the eight-year period.

Adjusted for inflation, Millennials are 25% wealthier than Boomers were at their age.

Long described as the “lost generation,” Millennials have “found” themselves thanks to their smart financial decisions, said Ann Hernandez Kent, a senior researcher at the St. Louis Fed.

Those decisions include maxing out on their 401(k) plans, investing in stocks, and buying real estate before the pandemic. Real estate now accounts for more than half of total Millennial wealth.

Despite their newfound wealth, Millennials constantly stress about whether it will all come crumbling down. Experts say this financial stress is due to their wealth being locked up and outside of their immediate control.

The rise of “phantom wealth”

A growing percentage of Millennials suffer from phantom wealth, a psychological disconnect between paper wealth and feeling financially secure.

As the Journal reported, rising home and 401(k) values can feel like phantom wealth because they are illiquid and can’t be spent immediately.

Being a wealthy homeowner doesn’t provide additional cash flow unless the properties are refinanced or sold for something smaller. For most homeowners, that’s not a tenable option due to the rapid rise in mortgage costs since 2022.

Tapping into 401(k)s isn’t a serious option for most, given the hefty early withdrawal penalties and tax implications.

For many Millennials, anxiety about the unknown has become a staple of their financial lives. They still remember the 2008 financial crisis and were full-fledged working adults during the Covid lockdowns.

“It’s almost like many Millennials are looking over their shoulder waiting for something to happen,” said Taylor Leary, a Colorado-based financial planner.

Unlike their parents, Millennials aren’t working in a stable job market, so they feel like their primary source of income is always in jeopardy. According to a Gallup poll, 21% of Millennials said they changed jobs within the past year—more than three times higher than people of other generations.

The survey also revealed that Millennials were less likely to see themselves with the same employer over long periods of time.

With unemployment rising, financial anxiety has increased across the board in America. As Creditnews reported, more than a quarter of employed workers reported job hunting over a four-week period, the highest share in more than a decade.