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Study: wealth gap between age groups grows during recession

One of the adverse byproducts for youth in Cincinnati and other areas of Ohio from the recent economic doldrums appears to be a growing wealth gap between older and younger Americans. Researchers have long studied the gap between the wealth held by different age groups. The study looked at the value of assets versus overall debt loads.

Historically, Americans in the age group of 65 and older have held more net worth than the younger generations. However, a recent study from the Pew Research Center suggests the wealth gap between generations has skyrocketed in recent years.

While this blog has reported an increase in more mature Americans who have found themselves in a position that has made filing for personal bankruptcy a good option, many experts are saying that younger Americans are experiencing a significant increase in debt than previous generations may have experienced. Historically, as people age, they have tended to have higher incomes and reduced debt, giving the age group of Americans an advantage in the wealth gap.

That somewhat continues to hold true overall, according to the PEW research. But, the latest study shows a significant debt burden held by younger Americans. The bottom line in the research is that the wealth gap jumped from 10 to one (10:1) in 1984 to a staggering 47 to one (47:1) in 2009, when the recession had become mature.

That means as of 2009, that the average net worth of a head of household aged 65 or older is currently 47 times greater than the average net worth of a head of household aged 34 and under. While a portion of the increase in the gap can be attributed to long-term trends, the Pew researchers say the economic crunch has been a significant factor. High credit card debt and high student loan debt account for much of the decrease in net worth for younger Americans. Of course the high unemployment rate has also factored into decreases in net worth since the onset of the recession.

While student loans are generally not dischargeable in bankruptcy, a person buried in overall debt may be able to benefit from the fresh start bankruptcy offers through a discharge or personal reorganization.

Source: AC News, "Age Gap Rises in Economic Well-Being," Susanna Kim, Nov. 7, 2011

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