Millennials Have ‘Phantom Wealth’ but May Not Feel as Rich

Millennials have seen stupendous growth in net worth, thanks to unprecedented home appreciations and stock market gains, but they still feel poor.

Call it “phantom wealth.” It might be there, but it’s basically invisible.

“Despite their wealth nearly quadrupling since 2019, rising from $3.94 trillion to $15.95 trillion, much of this is tied up in illiquid assets like real estate, leaving millennials feeling financially stretched,” WalletHub writer and analyst Chip Lupo tells Realtor.com®.

“I totally understand the feeling of phantom wealth, ” says Forrest Webber, 26, a multiple business owner and millennial in Huntsville, AL.

“Especially when it comes to a 401(k). They make you feel secure until a financial event comes up, and you realize it’s not actually yours yet!” he admits to Realtor.com.

Webber graduated from Tulane University with a major in finance. His first job was with JP Morgan as a data domain architect.

“I understand high-quality retirement accounts,” he notes.

Millennials were at their peak earning power at the start of the longest bull run in market history, from 2009 to 2020, with the S&P 500 showing a 330% gain.

As Webber’s retirement account ticked upward with compounded dividends, his ballooning net worth didn’t make him feel wealthy.

“With inflation, it can feel like the essentials are getting more and more out of reach every week,” he says. “Bigger purchases like cars can seem totally overwhelming and something you have to plan and save for a long time, especially with the dollar getting weaker every day.”

To keep control of his grocery bill, Webber likes to avoid the larger chain stores.

“I’ve found that going to your local farmers market is a great way to combat rising grocery costs,” he says.

Webber bought a home last year so it hasn’t offered much appreciation yet, but at least, unlike his portfolio, it gives him a place to live.

“At the end of the day, I have somewhere I can go,” he says. “It actually exists in reality, where the 401(k) is just a number on a screen I can’t touch.”

Why millennials don’t feel ‘rich’ despite huge gains

Millennials are known for feeling like they’re getting the short end of the financial stick but, in reality, haven’t done too badly for themselves.

The median wealth of older millennials, between the ages of 36 and 45, was 37% above expectations, according to a report by Federal Reserve Bank of St. Louis. The wealth of younger millennials and older members of Gen Z, those aged 26 to 35, exceeded expectations by 39%.

Homeownership for millennials continued to grow, with 62.3% of people ages 35 to 44 (mostly millennials) owning homes in just the third quarter of 2024, according to the latest Realtor.com data. That’s up from 60.3% in the first quarter of 2019, and home valuations have skyrocketed.

House wealth isn’t cutting it, though.

“While home prices soared by 44% in just a few years, this doesn’t offer immediate relief for daily costs, especially when 60% of Americans report dipping into emergency savings just to cover day-to-day expenses,” says Lupo. “This disconnect between perceived wealth and financial reality explains why so many millennials still feel financially insecure.”

You can’t exactly whip out your home valuation estimate to pay for, well, anything.

“Millennials are in a unique financial position—they are asset-rich but often feel cash-flow constrained due to economic pressures and life obligations,” says Melissa Murphy Pavone, founder of Mindful Financial Partners. “A high-value home or a well-funded retirement account can’t be used to cover daily costs without selling assets or taking on debt.”

While Boomers or Gen-Xers might be ready to cash out their house if adult children have flown the coop, millennials are likely either just starting or are in the midst of raising their families and don’t have that luxury.

“There is a cost-of-living crisis right now, and if most of your net worth is wrapped up in your home, it doesn’t matter what your net worth is, you’re going to be struggling!” says millennial Jack Prenter, CEO of personal finance site Dollarwise.

The rising costs of mortgage payments or rent, child care, school debt, healthcare, home insurance, and other essentials make millennials feel anything but rich, no matter what their accountants might say.

“What matters the most to your perceived situation is your cashflow and millennials have less money left over after they pay for essentials than past generations,” says Prenter.

“It’s not just that millennials feel poorer, or that they waste their money. We truly are a poorer generation because of the huge increase in the cost of housing, groceries, and essentials, while wage growth has been slow.”

The role of social media in ‘feeling poor’

Millennials are the first generation to grow up with social media, and it’s not doing much for their perception of their own financial health.

“Thirty-six percent say social media makes them feel frustrated about their finances, especially since a lot of users present a falsely positive image online,” says Lupo.

“With these pressures in mind, it’s no wonder millennials feel financially limited, even though they’re wealthier than previous generations were at their age.”

Popular minimalism guru Joshua Becker points to the “prosperity paradox,” which he defines as “the more money we accumulate, the more money we think we need.”

“One of the reasons we don’t feel wealthy is because we often compare ourselves to those who have more than us rather than those who have less,” he says.

Here comes the side hustle

Then there is job insecurity. The days of staying at one job for a lifetime and retiring with a pension are basically over.

On average, millennials stay at a job for no more than 2.5 years, and 21% reported leaving a job within the past year—three times more than other generations, according to a Gallup report.

This can result in a lifestyle seemingly unique to millennials and younger people: side hustle culture.

Webber is a prime example. He says he runs “roughly four” businesses.

Not only does he have a cleaning business called Bear Brothers Cleaning but also an online home improvement store, The Trade Table, and a fireplace distributor. Additionally, he sometimes works for his father’s company.

So forget feeling rich. Webber and other millennials feel as if they are just getting by.

“You feel like you have to have multiple hustles to survive!” he says.