Millennials have 'phantom wealth' hidden in their homes and 401(k)s — but they don't feel rich

• Millennials are actually doing pretty well financially right now.
• Owning a home and having started a 401(k) can create what's been called "phantom wealth."
• These millennials are rich on paper — but might not feel it.

Imagine two elder-millennial friends sitting in a coffee shop, eating avocado toast (this is all about generational generalizations, so let's stick to the classics).

Their monthly income is the same. They both spend the same on housing, transportation, and groceries. They both feel the burden of a high day-care bill . And their spending looks the same — that $12 toast hits the wallet just as hard for each.

Now imagine two big differences: One of the friends bought a home in 2019, while the other still rents. The homeowner was automatically enrolled in her company's 401(k) program at her first job out of college; the other only started contributing to a 401(k) recently.

One of these friends has millennial "phantom wealth" — wealth through homeownership and a 401(k) that is, for the moment, only on paper. It doesn't always make them feel rich, because they can't actually access the cash to spend it. But they're way ahead of their friend who still rents and started a retirement account later in life.

The Wall Street Journal reports that millennials , especially elder millennials, are doing surprisingly well financially after years of gloomy predictions about the generation. Compared with baby boomers when they were the same age, elder millennials are wealthier.

But the big driver of this is what the Journal calls phantom wealth: that illiquid wealth gained through real estate and rising retirement savings.

It's a similar conclusion to what my colleague Juliana Kaplan recently found: Millennials are doing just fine financially . (Hold on — I'll get to the caveats in a second.) That's because of a mix of factors like student-loan payment pauses and forgiveness, surging home prices across much of the country, and a stock market that's boomed over the past few years.

Still, the picture is not all bright: There is more drastic inequality among well-off millennials and those who are struggling.

The wealth gap between the top 20% and bottom 20% of millennials in 2022 was bigger than it was for boomers when they were a similar age, the Journal reported, citing a St. Louis Fed analysis. Black millennials are half as likely to own a home as white millennials (a bigger gap than other generations). And because real estate is the biggest driver of millennial wealth, that has a huge effect.

It's always been maddening for all involved to try to make sweeping generalizations about millennials (or any generation). And so many factors (medical costs, student debt, education, white-collar versus blue-collar work, race, family wealth, geography, etc.) complicate things.

But this phantom wealth in the form of illiquid real estate and retirement savings might be why, right now, it seems very surprising that millennials are doing "better" than boomers did at this age. It sure doesn't always feel like it.

Read More: The dramatic turnaround in millennials' finances (The Wall Street Journal)