Millennials are an interesting generation, because we usually discuss our avocado-toast-eating brethren as an economic monolith. We (mistakenly) assume all millennials are experiencing relatively similar economic hardships. 

But there’s one group of millennials—a small, unique subset with specific similarities worth exploring—that are actually doing a lot better than the top dogs of previous generations when they were millennial-aged. For definition’s sake, the “millennials” we’ll be talking about today are those born between 1981 and 1996—which would put them around the ages of 27 and 42 in 2023.

What tailwinds did these millennials benefit from that put them so far ahead of not only their peers, but 1%ers of generations past? Let’s dig in.

A wealth gap so gappy, it makes the Boomers look egalitarian

The young adults of today are shuffled into a system that creates even bigger winners and losers than the one their parents’ generation faced—which means they may find themselves priced out of the lifestyles they enjoyed as kids, even if their professional success rivals or even exceeds that of their parents.

According to data from the Federal Reserve’s 2019 Survey of Consumer Finances, the median net worth of someone aged 30–34 is about $19,000—while the net worth of a “Top 1%” 30- to 34-year-old is $1.37m. That’s a whopping 70x larger than the median for the age bracket. 

The story is even more damning for the 35–39 camp, where the median net worth is about $36,000 while the 1% net worth is $2.8m—77x larger. 

For comparison, the “60–64” group that’s inclusive of boomers has a 1% net worth that’s 60x larger than their median counterpart, and the 65+ camp’s 1% net worth is 54x larger than the median. A veritable socialist utopia, huh?!

So that’s median and 1% — but what type of wealth is considered “middle class”?

According to Pew Research Center, the median wealth (adjusted for inflation) of someone considered “middle class” overall in the US is $125,000. If one examines the “middle-of-the-road”-aged millennials (those 30-34 in 2019 when the data was collected), only the top 20% had a net worth that hit this middle class median wealth threshold. Those in the 20th percentile had a negative net worth, and those in the 50th percentile had a net worth of around $20,000.

You could probably explain some of this away by the simple factor of age; it’s common to have more debt when you’re young and accrue more wealth over time as your investments compound (for example, the median net worth for the “50-54” crowd was $122,000). 

For that reason, it’s probably fair to say that young people have a decent shot of aging into middle class wealth.

But how do we explain the sub-cohort of millennials that are thriving far beyond the historical average, when the majority clearly aren’t? 

Meet the millennial 1%

So how much do you need to earn to call yourself a millennial 1%er? 

Based on income alone, if you’re under 35, you’re a “top 1%” earner if your household earns more than $225,000. Something to #strive for, I suppose. 

My friend Nick wrote a great piece on Of Dollars & Data, so please enjoy this chart he labored over that shows top percentile earnings by age range:

And while income can be a good indicator of financial success, net worth tends to be a heartier measure of “things going right for longer,” as it’s more permanent than income (that can go away with little warning). To have a 1% millennial net worth (aka to be in the top 620K of the 62M existing millennials), you’d need to have socked away between $600,000 and $2.8M, depending on which cohort you belong to within the millennial spectrum. 

Sure, a 25-year-old can luck into a really great gig earning $250,000 per year—but how does one amass $2M by age 30? 

That’s a little trickier, and requires more digging. 

Because most millennials are still too young to have amassed decades of wealth from a successful career, the biggest factors in millennial net worth outcomes are whether or not they have student loans, if they own property, and their incomes. (Note that two of the three are strongly correlated to the amount of wealth their parents have.)

Because who are the millennials’ parents? The Boomers, baby! The Boomers, who are collectively poised to pass down approximately $70 trillion, are the single-richest group on planet Earth. 

(They hold more than half of all US wealth, and control about 17% of all wealth globally, a fact that really begs the question: How do we recreate the post-WWII economy without another World War?)

Student loans & property

I asked Canadian personal finance expert Bridget Casey, who wrote a piece called “There Is No Such Thing as a Millennial Middle Class,” to weigh in on the show this week, edited here for brevity: 

“It’s called the ‘Funnel of Financial Privilege.’ If someone receives some financial advantage from their parents, there's a high likelihood that they received others—and those benefits tend to accrue. 

Someone whose parents could afford to give them a down payment are likely the same parents who could afford to pay for their post-secondary, who tend to be the same parents that can probably afford to pay for a good chunk of your wedding.

It becomes a funnel that pushes [their children] to a really high net worth much earlier in life than people who didn't have any of those advantages.”

So it stands to reason that millennials whose parents foot the bill for college (and maybe even gifted them the down payment for their first home, or provided an interest-free loan) are in a radically different position today than those who did not have this leg up. 

Now, I realize that “some people just have rich parents!” doesn’t feel like a particularly revolutionary finding, but there’s a double whammy at play here: Not only did access to family capital allow this group to avoid taking out debt early in life (debt that doesn’t have an appreciating hard asset to offset it, mind you), but it also granted them access to an asset class that was on the brink of being propped up by expansionary monetary policy. 

Real estate’s all about timing, and millennials were between the ages of 15 and 30 in 2011 when the real estate market bottomed. The eldest millennials were in a prime position to buy their first properties right as real estate was cheapest. And it wouldn’t remain cheap for long, though as long as you got in before 2020, you saw the value of your asset skyrocket. 

Elder millennials with generous parents (or highly paid jobs!) were well-positioned to take advantage of one of the largest downturns in history. 

This theory sounds intuitively true, but is it accurate? We can pressure-test it: According to a Coldwell Banker luxury report that’s cited ad nauseam online, 92% of millennial millionaires own property. The average number of properties a millennial millionaire owns is 3, and their average real estate portfolio value is $1.4M. 

And because real estate is an asset class that primarily uses leverage to generate returns, this group’s parents wouldn’t have to be the yacht-owning, company-leading, Rockefeller types—a single, large cash infusion from a decently well-to-do family member at the right time can spark a mushrooming real estate portfolio, if you know what you’re doing. 

Of course, that’s not to suggest that every millennial real estate mini mogul got a large cash infusion from a family member—unfortunately, there’s no data to tell us how common that is. But it stands to reason that those with generous parents were more well-positioned than those in generations past, if for no other reason than the housing crash in the early aughts was the largest of all time.

Will the “Great Wealth Transfer” be the Great Equalizer? Probably not

According to Cerulli Associates in 2019, millennials are estimated to inherit $68T from the Boomers over the next decade or so. On its face, this sounds (?) like a good thing—the millennial generation as a whole is about to get a hell of a lot richer and close the gap, right? Start buying shares of $SBUX now!

Wrong! The Federal Reserve’s analysis shows that millennials who are already in the top 10% of the income distribution are twice as likely as millennials in the bottom 50% to receive an inheritance.

Per New York Magazine, “The millennial rich and upper-middle class will be the wealthiest [generation] America has ever known. Working-class millennials, meanwhile, are poised to enjoy less economic security than their parents, as their wages fail to keep pace with the rising costs of housing and health care.”

Based on these two factors alone—higher education costs and housing—you start to get two radically different classes of millennial experience, and variations of the two somewhere in between.

So what’s a 99% millennial to do?

History would tell us that—to some extent—it’s statistically likely that more of this generation will age into the middle class over time. 

But tactically speaking, if you're dealing with student loans, can’t afford a house, and don’t stand to inherit a bunch of money from your rich-ass Boomer parents, there’s really only one piece of the puzzle we touched on today that doesn’t rely as fully on external factors: Your income. 

Developing more marketable skills, working to surface more opportunities more frequently, trying different things…These are the highest points of leverage for many young people without the other tailwinds we described today, like family wealth or a house you bought in Boulder in 2012. It’s where your time and energy are likely going to go the farthest and provide the highest ROI.  

If you’re trying to determine where to focus your energy as a millennial in 2023, I think the answer is clear: Human capital.