Wealth Accumulation by Age Cohort in the U.S., 1962-1992: The Role of

A simulation model is developed to account for observed changes in mean household wealth both overall and by age cohort over the 1962±92 period in the U.S. There are three major ®ndings. First, capital gains are the major factor explaining overall wealth changes and account for three-fourths of the simulated growth in wealth over the entire period, while savings account for the other quarter. Second, for cohorts under age 50, inter vivos transfers dominate observed changes in wealth. Indeed, the oldest age groups appear to have transferred sizable amounts of their wealth to younger generations inter vivos, raising the wealth of these younger groups substantially above what it would be based on saving alone. Third, over the lifetime, I estimate that savings, inheritance, and inter vivos transfer each contribute about one-third to the lifetime accumulation of wealth. 1