There’s a massivewealthtransfer underway.
“It has started and it’s only going to accelerate,” said Liz Koehler, head of advisor engagement for BlackRock’s wealthadvisorybusiness.
Baby boomers are set to pass more than $68 trillion on to theirchildren. And yet, somemillennialsandGeneration Zmay not be inheriting as much as they think.
Recent reports show a growing disconnect between how much the next generation expects to receive in the “great wealth transfer” and how much their aging parents plan on leaving them.
To that point, 68%, of millennials and Gen Zers have received or expect to receive an inheritance of nearly $320,000, on average,USA Today Blueprintfound. Additionally, 52% of millennials think they’ll get even more — at least $350,000 — according to a separate survey by Alliant Credit Union.
However, 55% of baby boomers who plan to leave behind an inheritance said they will pass on less than $250,000, Alliant found.
Further, just one-third of white families and about one in every 10 Black families receive any inheritance at all, and more than half of those inheritances will amount to less than $50,000, according to a separatestudyby Federal Reserve Bank of Boston.
Part of the discrepancy is because “parents are just not communicating well with their adult children about financial topics,” said Isabel Barrow, director of financial planning at Edelman Financial Engines.
Tack oninflation, high healthcare costs and longer life expectancies, and boomers suddenly may be feeling less secure about theirfinancial standing— and less generous when it comes to giving money away.
Overall, fewer Americans are feeling financially confident these days, a report byEdelman Financial Enginesfound, and just 14% would consider themselves wealthy.
Millennials may be 'richest generation in history'
Still, over the next decade this intergenerational transfer could make millennials “the richest generation in history,” according to the annualWealth Reportby global real estate consultancy Knight Frank.
These funds come at a time whenmillennialsandGen Zers are having a harder timemakingit on their own.
In addition to soaring food andhousing costs, today’s young adultsface otherfinancial challengestheir parents did not at that age. Not only are theirwages lowerthan their parents’ earnings when they were in their 20s and 30s, after adjusting for inflation, but they are also carrying largerstudent loan balances, recentreports show.
With so much at stake, “there is so much missing that needs to be discussed with our adult children when it comes to what happens with our money,” Barrow said.
Boomers need to map out a plan
At the same time,views of inherited wealth are changing, according to BlackRock’sKoehler.Parents want to feel confident that the next generation is going to have the same value system around building wealth.
“Firms and advisors who are doing this well are finding ways to open up the conversation so it is clear and transparent and setting common family values and expectations around philanthropic endeavors,” she said.
The failure to create such a strategy is a major issue, the Edelman report found: 90% of parents intend to leave an inheritance to their children but 48% do not have a specific plan in place.
That makes it even more important to map out how that money will be handed down as well as exactly how much will change hands, Barrow said, in addition to discussing it as a family.
“It’s not only what are you getting but how you are getting it — all of this needs to be part of a big-picture financial plan,” she said.
Jessica Dickler, CNBC
Jessica Dickler is a personal finance writer for CNBC.
FAQs
A vast $90 trillion wealth transfer over the next 20 years will likely make millennials "the richest generation in history," according to consultancy Knight Frank. "The millennials are very ill prepared [to handle this wealth]," said family wealth management expert Salvatore Buscemi.
How much wealth will millennials inherit? ›
Estimated wealth to be inherited through 2045, by generation. Baby boomers (born 1946-1964) will inherit $4 trillion. Gen X (1965-1980) will inherit $30 trillion. Millennials (1981-1996) will inherit $27 trillion.
Will a $90 trillion great wealth transfer make millennials the richest generation in history? ›
The wealth transfer is poised to make millennials “the richest generation in history,” according to Knight Frank's 2024 Wealth Report. But taking into account changing life expectancies and other life factors, that dream might not fully be realized.
What is the great transfer of wealth? ›
The study reveals that 48% of Americans plan to leave an inheritance of an estimated $84 trillion in assets through 2045, dubbing this the "Great Wealth Transfer" by many.
Is the great generational wealth transfer underway? ›
Over the next two decades, Cerulli Associates estimates that baby boomers and the Silent Generation will pass down a combined $84.4 trillion in assets to younger generations. Dubbed the “Great Wealth Transfer,” this phenomenon is already underway and will impact millions of families.
What does the Bible say about wealth transfer? ›
The Wealth Transfer in scripture is God's plan to transfer wealth out of the hands of wicked people and place it in the hands of those who are good before God—His Children (Prov. 13:22, Ecc. 2:26).
Why might millennials waiting for an inheritance be disappointed? ›
While younger generations are counting on an inheritance to get onto the property ladder, for many the money will be too little, too late — and for the unlucky ones it won't come at all, or it will be frittered away on legal disputes.
Will Gen Z be the richest generation? ›
But a recent report by World Data Lab and NielsenIQ, “Spend Z: Gen Z Changes Everything,” paints a very different picture. It found that Gen Z will be the largest – and wealthiest – generation in history, and that these benefits will be more evenly dispersed around the world.
Are there any Gen Z billionaires? ›
The world's 8 richest young billionaires of 2024 – net worths, ranked: from Gen Z Ray-Ban heirs Clemente and Luca Del Vecchio to Red Bull's Mark Mateschitz and Met Gala regular Gustav Magnar Witzøe.
What is the #1 generator of wealth over time? ›
U.S. wealth distribution 1990-2024, by generation
In the first quarter of 2024, 51.8 percent of the total wealth in the United States was owned by members of the baby boomer generation.
American Gen Zers, the oldest now entering their late 20s, have already accumulated substantial wealth through inheritance, investments, and entrepreneurship. Cerulli Associates estimates a seismic USD 84 trillion will transfer from baby boomer wealth in the USA to heirs, with Gen Z front and center.
What is the top 1% of millennials? ›
Consider that millennials are toward the younger end of earners, which plays a role in where they fall on the net worth continuum. “They hit the top 25% at around $50,000 and the top 1% at about $175,000,” Jennings said.
Who will inherit $30 trillion? ›
McKinsey estimates that by the end of the decade, women in the United States will control most of the baby boomers' “unprecedented” US$30 trillion in assets — a wealth transfer nearly as big as America's yearly gross domestic product.
How did millennials get rich? ›
According to CAP's analysis, some of the major areas in which people under age 40 have gained wealth is through housing, liquid assets, personal businesses, stocks, major purchases (such as cars), and deflating credit card and student loan debt. Housing accounts for the largest gain in assets for this age group.
What is the average inheritance of millennials? ›
To that point, 68%, of millennials and Gen Zers have received or expect to receive an inheritance of nearly $320,000, on average, USA Today Blueprint found. Additionally, 52% of millennials think they'll get even more — at least $350,000 — according to a separate survey by Alliant Credit Union.
What is the wealth trend for millennials? ›
According to the study, the average millennial has 30% less wealth at the age of 35 than baby boomers did at the same age. Yet the top 10% of millennials have 20% more wealth than the top baby boomers at the same age.
Why is it so hard for millennials to save money? ›
Millennials and Gen Zers are pulling in bigger paychecks, but much of their spending power is fueling short-term purchases like groceries and vacations, not savings. Young adults' wealth is growing, but they're still living and spending in the here and now. Many feel they don't have a choice.
What is the financial situation of millennials? ›
Today's 22-to-24-year-olds are also more likely to be delinquent on credit cards and car loans than the generation before them, the credit reporting agency found. And debt loads have gone up faster than rising incomes for Gen Z, TransUnion found.
What percentage of wealth is owned by millennials? ›
U.S. wealth distribution 1990-2024, by generation
In comparison, millennials own around 9.4 percent of total wealth in the U.S. In terms of population distribution, there is almost an equal share of millennials and baby boomers in the United States.
