Gen X and Gen Y falling behind parents’ wealth

“Young people are falling behind,’’ said Caroline Ratcliffe, one of the authors of “Lost Generations? Wealth Building among Young Americans.’’

“Across different generations and ages, what we tend to see in this country is that each generation is better off and wealthier. That fact that this group is falling behind is very different,’’ said Ratcliffe, a senior fellow at the Urban Institute.

If young Americans cannot accumulate wealth over their lifetimes, as people in prior generations did, they will be less able to support themselves when they retire, Ratcliffe said. The study points out that despite the relative youth of those in Gen X and Gen Y — people born since 1966 — they may not be able to make up the ground they have lost.

University of Dayton alumnus Rebecca Young said she has benefited from her parents’ strong savings, and she hopes to do the same for her future children.

At 23, she is working toward a master’s degree and stocking what she can in a rainy day fund she has had since high school. But, the Xenia, Ohio, native said it can be difficult to save, especially for young people with large student loans.

‘‘People in my generation are of the opinion that it’s OK to take out tens of thousands of dollars in student loans,’’ said Young, who graduated in May 2012. ‘‘That puts them in debt right away.’’

And with that money in their checking accounts, they do not take into account that they are spending borrowed money, Young added.

Student loan debt has increased in recent years and recently passed $1 trillion (more than credit card debt). Ratcliffe said those large loan burdens can have a ripple effect, delaying young people from being able to build savings or buy a house.

Americans in their 20s and 30s who were homeowners were among the hardest hit by the housing crash, because their mortgages were large, compared to their home values, and they could not take advantage of lower interest rates, Ratcliffe said.

The wealth of those ages 29 to 37 suffered the largest fall, dropping 21 percent, comparef to people of those ages in 1983, according to the study.

“The idea of moving into the suburbs and having a big home, maybe that changes for this generation,’’ Ratcliffe said.

If young people cannot catch up to previous generations, she said, they will be more likely to rely on safety net programs because they will be less able to support themselves during retirement. She said some of the government programs that support long-term asset building must be redistributed to help low-income and young households.

Ratcliffe said young people should start saving by automatically transferring even just $10 a month into a separate account.

A Wittenberg University sophomore, Marston Garceau, said his parents encourage him to save, keep receipts, and create a budget for the money he earns. But most students, he said, will spend instead and ‘‘go out to eat when they don’t need to or buy video games, like me.’’

‘’We’re living in the here and now and not thinking about the future, where my parents are all about the future — which I am thankful they are, or I wouldn’t be here,’’ he said.

Miami University freshman Ariel Baker, 21, has already learned some hard lessons. Baker said she ran out of money when she first enrolled in college, had to move back in with her parents, and worked odd jobs for years to save enough to re-enroll. Now, the zoology student said she is spending smarter with scholarships to help her pay for schooling.

Baker said how much someone saves depends on individual habits. But in general, ‘‘The economy hasn’t fully recovered yet, so I’d say now is not the time to be looking at how my generation saves money.’’