(Note: This post is part of a long series, prepared in advance of leaving town on a three-week vacation.)

I recently read some articles claiming Gen Z -Americans born between the late 1990s and the early 2010s - have become “unprecedentedly rich”, an assessment purportedly based on some number-crunching by the Federal Reserve. Turns out that’s not what the Fed found. To quote:

“Younger Americans (millennials and Gen Zers, or those born in 1981 or later) had greater household wealth, on average, than Gen Xers (born between 1965 and 1980) and baby boomers (born between 1946 and 1964) did when both generations were close to the same average age (34).4 In the third quarter of 2024, younger Americans owned $1.25 for every $1 of wealth owned by Gen Xers, on average, at close to the same age (2006:Q4). Younger Americans owned $1.35 for every $1 of wealth owned by baby boomers, on average, at close to the same age (1989:Q3).”

And the Fed’s chart documenting generational differences in wealth by age 34:

So the Fed wasn’t referring to Gen Z alone but had combined millennials and Gen Zers as “younger Americans”. Somehow the headlines missed that nuance*. Now the data makes a lot more sense: the oldest Gen Zers aren’t even 30; they’re still too young to have accumulated much wealth.

Doesn’t matter to AI Overview, who responded to my question “Why does Gen Z have more wealth?” with quite a lengthy answer. To quote:

Gen Z is projected to become the wealthiest generation due to a combination of factors, including the Great Wealth Transfer, strong economic growth, early retirement savings, and innovative investment strategies. The "Great Wealth Transfer," where Baby Boomers are passing down assets to younger generations, is a significant driver. Additionally, Gen Z's strong credit scores, less student debt than previous generations, and early engagement in financial markets have fueled their wealth growth. 

Elaboration:

Great Wealth Transfer: Baby Boomers, who accumulated significant wealth over their careers, are now either passing down assets to their heirs or are expected to do so in the coming years. This transfer, estimated at $84 trillion in the US alone, will significantly boost the wealth of Gen Z. ·  · 

Strong Economic Growth: Gen Z came of age during an economic boom, which has provided more opportunities for employment and wage growth.  

Early Retirement Savings: Gen Z is starting to save for retirement earlier than previous generations, allowing their investments more time to grow through the power of compound interest.  

Innovative Investment Strategies: Gen Z is actively investing in various assets, including stocks, cryptocurrency, and even real estate, demonstrating a proactive approach to wealth building.   

Digital Economy: The rise of the digital economy has opened up new avenues for Gen Z to generate income through platforms like social media, online businesses, and freelance work.· 

Strong Credit Scores and Reduced Student Debt: Gen Z's strong credit scores and relatively lower student debt compared to previous generations allow them to access credit and finance investments more easily.  

Increased Spending and Luxury Goods: Gen Z is expected to have a significant impact on global spending patterns, particularly in the luxury goods market, as they increasingly have the financial means to indulge in these purchases.

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* Some examples:

Generation Z is unprecedentedly rich/The Economist

Does Gen Z stand a chance at being one of the wealthiest generations?/CNBC

 The Gen Z Wealth Boom in the USA/ Henley & Partners

Gen Z To Become Richest Generation By 2035: Report/Newsweek