Generational Wealth Transfer



According to a recent NBC News article, baby boomers generations are going to give “tens of trillions of dollars to their heirs over the next few decades”.

The “generational wealth transfer” has become a media fascination, both for its eye-popping size and because it might help younger generations as they face doubts about their financial security. That shift is already in the works, and will continue for a couple of decades.

– NBC News

Quoting Carelli Associates, a wealth management firm, NBC News writes, “Some $53 trillion will be passed down from boomers to their Gen X, millennial and Gen Z heirs, as well as to charities. That includes both gifts during their lifetimes and inheritances afterward”.

However, the article argues that because the current older generation is incurring an overwhelming amount of healthcare costs, not much wealth will be left to transfer to the later generations.

In the second half of the 20th century, many baby boomers benefited the American economic growth. “They had an easier time buying low-cost housing than their children or grandchildren would. Those who bought homes benefited as those properties increased in value. They’ve had the most time to benefit from the U.S. stock market, which has soared roughly 4,000% since 1969,” the article reports.

Members of the Gen X and millennial cohorts have had to contend with headwinds on multiple fronts. Among them, the explosion in student debt, the rising cost of living, the dot-com bust, the Great Recession, the long but sluggish boom of the 2010s and the Covid-19 pandemic, at more vulnerable stages of their lives and careers.

So those younger generations might feel they could use a leg up. According to a 2023 survey by the Transamerica Center for Retirement Studies, Gen-Xers reported having a median of $82,000 in retirement savings, while millennials reported $49,000 in savings. Even with many working years ahead of them, some have doubts about their ability to retire with financial security.

– NBC News

“It’s kind of a wild card as to what the health care expenses are going to be like and it can balloon in the final years of life. A lot of Gen Xers may not get the inheritance they’re expecting to get because their parents encountered ballooning expenses in the later years of life,” Greg McBride, chief financial analyst for Bankrate, told NBC News.