5 driving forces behind the millennial-boomer generational wealth gap

• Millennials' slow financial progress isn't just because of The Great Recession.
• A new Deutsche Bank Research report said boomers got lucky in five areas millennials haven't: low interest rates, urbanization, pollution, cohort size, and education.
• These external forces have created a vast generational wealth gap.

The Great Recession can't take all the blame for millennials being financially behind.

The financial crisis left the oldest millennials with wealth levels 34% below where they would be if it didn't occur, and it possibly stagnated the generation's wages for up to 15 years after graduation, but other factors are at play.

"Younger generations have been hit particularly hard while older folk have reaped the benefits," states a new Deutsche Bank Research report. The report highlighted five key areas where baby boomers have been luckier:

1. Low interest rates have increased the value of assets, which boomers typically own more of and millennials struggle to build enough wealth to buy.
2. Urbanization has inflated housing prices, leaving little affordable supply for aspiring millennial homeowners. First-time homebuyers in the US are paying 39% more than they were nearly 40 years ago, according to Student Loan Hero. As millennials struggle to save up for a down payment, they're renting longer and buying later than previous generations.
3. Boomers have invested in companies that have profited from creating pollution, such as Chevron and BP, and millennials will have to pay the price to clean up the environmental damage.
4. Boomers have long been the largest generation, leading the results for democratic processes like the 2016 US election and the Brexit referendum. This cohort size dominance only just ended in 2019, when millennials overtook boomers as the largest generation in America, per the Pew Research Center.
5. Millennials require more education than their parents did for similar jobs and have had to pay more for it. Student Loan Hero found that in the US, the average student debt per graduate who took out loans is higher than ever, at $29,900, contributing to a national total of $1.63 trillion.

These forces have all created a vast generational wealth gap between millennials and boomers. Millennials hold four times less US wealth than boomers held at their age, per Fed data, and earn 20% less than boomers did, a report by think tank New America found.

What to do next?

Well, the Deutsche Bank Research report also called for a boomer tax to level the playing field. It argues against an age-related tax in favor of policies focused on the five areas above to avoid higher income taxes. The report proposes taxes on primary residences and other assets such as stocks and bonds, as boomers sell these into retirement to avoid higher income taxes.