Baby boomers are poised to hand down more than $68 trillion to their children. However, some millennials and Generation Z individuals might not inherit as much as they believe. Recent studies indicate a notable disparity between the expected inheritance of the next generation and the actual intentions of their aging parents.
For instance, USA Today Blueprint discovered that 68% of millennials and Gen Zers have either received or anticipate receiving an inheritance averaging nearly $320,000. Another survey conducted by Alliant Credit Union revealed that 52% of millennials anticipate inheriting at least $350,000. However, Alliant found that only 55% of baby boomer who plan to leave behind an inheritance said they will pass on less than $250,000.
A research from the Federal Reserve Bank of Boston reveals that only one-third of white families and approximately one in ten Black families receive any inheritance. Furthermore, over half of these inheritances amount to less than $50,000.
A significant factor contributing to this discrepancy is the lack of effective communication between parents and their adult children regarding financial matters, as noted by Isabel Barrow, director of financial planning at Edelman Financial Engines. When considering factors such as inflation, rising healthcare expenses, and longer life expectancies, baby boomers may be experiencing a diminished sense of financial security and consequently, may be less inclined to be as generous with their wealth.
Millennials could potentially become the “richest generation in history” over the next decade due to the ongoing intergenerational wealth transfer, as highlighted in the annual Wealth Report by global real estate consultancy Knight Frank.
However, despite this promising outlook, millennials and Gen Zers are grappling with significant financial challenges. Rising food and housing costs, coupled with other financial burdens not experienced by previous generations, are making it increasingly difficult for today’s young adults to achieve financial independence.
Recent reports indicate that millennials’ wages, when adjusted for inflation, are lower than those of their parents during a similar life stage. Additionally, millennials are burdened with larger student loan debts compared to previous generations. Given the magnitude of these financial issues, there is a pressing need for open discussions between parents and their adult children regarding the management and distribution of wealth.
The Great Wealth Transfer at a Glance
By 2030, all baby boomers, born between 1946 and 1964, will reach the age of at least 65, collectively owning 52.8% of the country’s wealth. Researchers anticipate a significant generational wealth transfer, estimating up to $84 trillion in assets to change hands over the next two decades.
Generation X (born between 1965 and 1980), millennials (born between 1981 and 1996), and Gen Z (born between 1997 and 2012) are projected to inherit $72 trillion of this total. Charitable organizations are expected to receive approximately $12 trillion from this wealth transfer.
