Assets and Debts of Younger Households

One thing we heard in the comments to Coberly’s bravura Social Security op-ed was an opinion that the younger generation should be allowed to opt out of the program so that they can save their own way to retirement riches. This had me thinking, what’s the data saying about recent behavior — after all, factors including the declining prevalence of private defined-benefit pensions would increase households’ need for private savings.

So are they actually saving early and often (a good idea, BTW)? Alas, the Fed’s Survey of Consumer Finances isn’t very fresh: we can expect 2007 survey results sometime next year. Still, the 2004 results give us a bit of stock bust and housing bubble, and the ability to make some long-range comparisons. Here’s the median net worth, holdings of financial and nonfinancial assets, and debt loads [*] for households headed by under-35s and 35-44 year olds, in thousands of 2004 dollars:

Ups and downs of the housing and stock markets being what they are, younger households in 2004 find themselves no more wealthy than their predecessors of nearly a generation ago, despite a a lot of risk transfer from institutions to individuals. This certainly doesn’t make much of a prima facie case for removing the retirement safety net.

It’ll be very interesting to see the non-financial asset and debt data for ’07.

[*] A quirk of the reporting is that the median asset holdings are reported for the subsets of households with assets. Given the prevalence of asset holdings for these aggregates, the asset and debt figures are roughly the 55-60th percentile figures.

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