Younger Americans, particularly Millennials and Generation Z, are facing an alarming financial reality as wealth transfers from older, wealthier generations become more pronounced. This transfer primarily occurs through government programs such as Social Security and Medicare, contributing to a growing wealth gap and raising questions about the sustainability of these systems.
The disparity in net worth is striking. Current data reveals that heads of households under 35 have a median net worth of approximately $39,000, while those aged 75 and older possess a median net worth of around $335,000. This trend underscores a significant generational inequity, where older individuals benefit from a wealth structure that younger generations find increasingly difficult to navigate.
A decade ago, Nick Gillespie and I discussed this issue in Reason, highlighting how Social Security and Medicare have become central to America’s generational divide. Senior households are wealthier than ever, often owning homes outright in markets that younger families struggle to enter. Moreover, seniors today experience greater stock ownership and have substantially benefited from rising asset values over the years. Meanwhile, younger individuals grapple with escalating housing costs, student-loan debt, and a labor market characterized by slow growth and increasing federal debt.
Russ Greene from the Prime Mover Institute recently coined the term “Total Boomer Luxury Communism,” describing how affluent seniors disproportionately benefit from government aid. He points out that Social Security can redistribute up to $60,000 annually to an individual and $117,000 to a household. Medicare, Greene argues, often subsidizes luxuries such as golf memberships and pet care, raising valid concerns about the fairness of these expenditures.
The burden on younger generations is substantial, with projections indicating they will face approximately $73 trillion in unfunded obligations over the next 75 years. While some advocates suggest that higher taxes could resolve these issues, this would likely perpetuate the cycle of wealth transfer, further straining the financial resources of younger earners.
Critics of the current system argue that it overlooks modern demographic realities and wealth patterns. As Andrew Biggs from the American Enterprise Institute notes, a typical average-wage retiree in the 2030s could receive 37% more in Social Security benefits than they paid in. The disparity is even greater with Medicare, where seniors may receive three to five times their contributions. This raises critical questions about the fairness of a system that requires younger individuals to fund a system that primarily benefits the affluent.
The prevailing narrative often portrays seniors as a vulnerable group needing protection. Yet, many Americans across various political ideologies are beginning to recognize the inequities inherent in the current structure. The perception that younger generations must continue to support a system that disproportionately benefits older, wealthier individuals is prompting calls for reform.
As we approach 2026, the legal landscape surrounding Social Security remains complex. The Supreme Court clarified in the 1960 Flemming vs. Nestor case that Congress retains the authority to amend Social Security benefits. This flexibility suggests potential for reform that could address the imbalances without compromising the essential safety net for those genuinely in need.
Veronique de Rugy, a senior research fellow at the Mercatus Center, emphasizes that the current system represents a slow-motion generational fleecing. With mounting pressure from various factions, the conversation surrounding Social Security and Medicare is shifting. As younger Americans increasingly voice their concerns, the urgency for reform becomes clearer, highlighting the need for a system that balances fairness and sustainability while ensuring a genuine safety net for all generations.
