Why were boomers able to buy a house on a single income while young people today struggle to even afford a down payment?
That’s the question financial influencer Ramit Sethi asked his followers in a recent YouTube episode. Answering his own query, Sethi said that “boomers built wealth in a system that no longer exists,” thanks, in part, to their changing the rules to prevent others from benefitting from housing opportunities they themselves had enjoyed for decades.
Here’s how boomers locked you out of wealth-building opportunities, and five steps for building wealth today, according to Sethi.
Sethi noted that housing and retirement are two of the most expensive things a person can pay for, and boomers benefitted from both. First, they were the recipient of pensions. Pensions have nearly all been replaced by 401(k)s, “which means that retirement burden has been shifted to individual employees,” the best-selling author said.
Next, boomers benefitted from favorable government policies that encouraged homeownership. Middle-class homes were often bought on one salary. The same people who built wealth off of these affordable homes then went to local government to block the building of more homes. This created less supply and increased the cost of housing, effectively cutting off future generations from cost-effective homeownership.
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While it may seem hopeless for younger generations, there are things that they can do to help build wealth.
First, Sethi reminded his 1.03 million subscribers that voting matters. He encouraged progressive voices to ensure they are heard. According to Housing Matters, an Urban Institute initiative, millennials and Gen Zers account for over 40% of the population in the U.S. and are projected to make up the majority of the votes in the next five years.
One of the major barriers to homeownership for young adults is a lack of supply. Changes in federal policy can help to increase the affordable housing supply. Therefore, voting for people who support these initiatives becomes critical.
While younger generations may not have the same access to pensions that boomers did, it doesn’t mean that companies aren’t willing to help supplement an employee’s retirement. The YouTuber encouraged his subscribers to max out their retirement.
