One indicator many people use to determine how well they’re doing in life is to compare themselves with their parents.
After all, your parents’ socioeconomic situation can be pretty prescriptive of how you’ll fare in life. To do better than them is a common goal for families from a variety of backgrounds.
But these days, not too many people are accomplishing that goal.
The share of people who go on to earn more than their parents has been steadily declining since the 1940s. In fact, just 50% of people born in 1980 have grown up to earn more than their parents, compared with 90% of people born in the 1940s, according to Opportunity Insights research.
It makes sense then that just 36.5% of adults say they feel they’re better off financially than their parents, according to CNBC’s International Your Money Financial Security Survey conducted by SurveyMonkey. A greater share — 42.8% — say they’re worse off than their parents, while the remaining 20.7% say they’re faring about the same.
As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.
What’s more, many adults in their peak earning years were more likely than their older and younger peers to say they’re worse off than their parents, the survey found. Here’s the share of each age group that says they feel worse off financially than their parents:
Ages 18 to 34: 38.2%Ages 35 to 65: 49.8%Ages 65 and up: 32.7%
While every family is different, there are a number of reasons why middle-aged adults feel worse off than their parents, broadly speaking, as well as a few reasons things might not be as bad as they seem.
Some things really are harder for younger generations
Americans in the 35- to 65-year-old range mostly belong to two generations: Gen X (ages 44 to 59) and millennial (ages 28 to 43). A variety of factors have made certain financial milestones statistically harder to reach for those groups than they were for baby boomers and the silent generation, who would likely be their parents.
Here are three ways younger generations are financially worse off than their older counterparts.
1. Wage stagnation
When adjusted for inflation, wages in the U.S. have barely budged since the 1970s. As prices have trickled up with inflation, once-strong salaries have lost a lot of their buying power.
Millennials and Gen Xers today could be making the same salary their parents did at the same age, but their parents’ salaries went much further.
2. Unattainable homeownership
The steady rise in home prices has made it seemingly impossible for many would-be owners — especially millennials — to buy homes. U.S. home prices are 24 times higher in 2024 than they were in 1963, according to a recent study by Clever.
Owning a home in and of itself doesn’t make you well-off or financially secure. But if your parents owned their home at your age and you can’t afford to buy one, despite earning as much money or even more than they did, that could contribute to feeling worse off.
3. High education costs and student debt
Though the younger generations have attended college at higher rates than their parents, they’re also paying a much higher price. The cost of attendance for a four-year college has jumped 153% in the last 40 years, according to Bankrate.
As a result, Gen X and millennials hold nearly 87% of the country’s student debt balance, with Gen X alone holding 57%, according to the Education Data Initiative. Gen X borrowers also have the highest average loan balance at $44,290.
Things aren’t all bad, though
“People like 30-year-olds today are comparing themselves with their parents at 30 and feeling like they’re behind,” Tara Unverzagt, a certified financial planner and therapist, told CNBC Make It. “And to a certain extent, I’m not sure that’s true.”
Here are three ways younger generations are doing better than their parents.
1. More education
Gen X went to college at a higher rate than previous generations, followed by millennials becoming the most-educated generation to date. Nearly 40% of millennials have at least a bachelor’s degree, compared with just 25% of baby boomers, according to Pew Research.
More education almost always translates to higher incomes, which could help explain why at millennials have more wealth, on average, at ages 33 and 34 than Gen X and baby boomers did at the same age, according to the St. Louis Fed.
2. Better quality of life
Certain products and services we use may be more expensive today, but are often better.
Unverzagt uses buying a car as an example. “Compare the cheapest car you can get today versus the cheapest car you could get 20 years ago,” she says. “The cheapest car today is way better.”
Technological advancements, safety standards and innovation have made things like communication, transportation, health care and more all better for the general population, Unverzagt says.
3. More equality
Younger generations have navigated adulthood with more freedoms than a lot of their parents may have had.
Today’s adults are only a generation or two removed from a time when there were fewer legal protections to help ensure people are treated equally when it comes to their pay, housing opportunities and lending abilities.
Gender and racial pay gaps, along with other barriers to wealth-building, certainly still affect Gen X and millennials. But legislation like the Equal Pay Act of 1963, the Fair Housing Act of 1968 and the Equal Credit Opportunity Act of 1974 have helped the younger generations avoid some — albeit not all — of the financial hurdles their parents and grandparents may have encountered.
Optimism for the next generation
Despite pessimism about their own situations, 42% of adults overall think their kids will be better off financially than they are, CNBC’s survey found. That number drops to 40% among adults ages 35 to 64.
Current parents are even more likely to believe in their children’s prospects, with 59% of survey respondents with kids saying their offspring will be better off financially. Just 1 in 5 parents say they think their children will be worse off.
An inheritance could give those children a head start and help them build on their parents’ financial success. Over 75% of respondents say they plan to leave their future children money in their will.
Leaving that money behind isn’t what matters most, though. Their kid landing a secure job is the most important factor to ensure a better financial outcome, according to 43% of parents surveyed. A fully-funded education was the next-most important (20%), followed by an inheritance (15%).
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