This little graph explains a lot. Despite the devastation of the recession and the lingering downturn, many of us with grown children are willing and able to lend or gift our kids money--to pay off debt, to get a start in life. Yes, our 401ks suffered in the 2008 debacle; some of our homes are underwater [literally--thank you, Hurricane Sandy] and figuratively). But evidently, our wealth has been coming back or it survived the hard times. According to a recent Pew Research Center survey, we of the baby boomer generation suffered less--lost less wealth than other groups and overall--in terms of financial loss--are in much much better shape than our 20- and 30-something children.
Why did the Great Recession hit households headed by grown kids in their late 30s and early 40s so hard? The federal Survey of Consumer Finances suggests it gets down to housing. For most Americans, equity in their homes represents the bulk of their wealth. The collapse of housing values in the middle of the past decade sent personal wealth into a nose dive for just about everyone, regardless of age. Overall, though, the Consumer Finances survey found that median home equity—the fair market value of a home less the amount of the outstanding mortgage and other liens—fell by about a third (32%) from 2007 to 2010. And U.S. Census data released in June found that most of the decline in median wealth between 2005 and 2010 can be attributed to sinking home values. We who've owned our homes longer and paid off more--if not all--of our mortgages, are coming out of the Great Recession in better shape.
All of which translates into a fuller bank account and the wherewithal to be generous to our grown children, should we choose to be.
Very true, but I for one still feel shaky enough about the economy that I'm not sharing the wealth in any significant fashion. The best gift I can give to my children is to stay financially independent until death, and there's where I'm focusing my efforts.
Posted by: Susan Adcox | December 02, 2012 at 08:52 AM