The numbers can almost make your head spin. Depending on the source, the coming “Great Wealth Transfer” from Boomers to Gen Xers and Millennials can range from $50 trillion (NBC News) to $72 trillion (USA Today) to $90 trillion (CNN). And not to sound flip, but when you’re operating in this sort of monetary stratosphere, what’s $40 trillion here or there?
One could argue that, whatever the actual figure, there certainly seems to be “enough to go around.” But the real question is: How much and to whom will this astronomical sum “go around”?
Begin with the danger of lumping a group by any single measure, in this case age. That is, 44-to-59 year olds (Gen X) and 28-to-48 year olds (Millennials). Shouting about a multi-trillion-dollar wealth transfer can leave the impression that everyone in these age groups will hit the inheritance lotto. Most will not, of course, but some will.
However, even recipients operating in the upper reaches of this financial boon might want to hold off yacht shopping until mom and dad leave the bonds of earth.
Putting aside for a moment how we might counsel those heirs on the financial nuts-and-bolts of planning for a large financial influx, and the importance of doing that while the benefactors are still with us, another important question vis a vis the Great Transfer is this:
Will those hyped sums actually materialize and find their way into future generations’ bank accounts? One major reason they may not: Unforeseen expenses, especially as regards healthcare for the benefactors.
While CNN seems optimistic about the Transfer with this March 1, 2024, headline: “Millennials Stand to Become the Richest Generation in History, After $90 Trillion Wealth Transfer,” other media outlets sound warnings. For example: An NBC December 29, 2023, headline reads, “The ‘Wealth Transfer’ from Boomers Won’t Save Gen X and Millennials,” and the story states, “Experts say baby boomers will give more than $50 trillion to their heirs. But for many, health care costs will claim the bulk of that wealth.”
And USA Today concurs with this April 1, 2024, headline, “Hey, Gen X, Z and Millennials: Here’s Why You May Miss Out on the Great Wealth Transfer.” The headline is followed by a story that opens with a description of how the health misfortunes of one wealthy Boomer couple drained dry their financial legacy.
Our purpose here is not to put a negative spin on the Great Transfer phenomenon, but to caution both the givers and receivers of the Transfer to, quite simply, plan now, while all are present, no matter how great or small the Transfer amount.
And what of those offspring of ultra-high net worth benefactors who do, in fact, receive a lotto-size windfall intact? While they may have lived an affluent life growing up, including already having a yacht, a sudden influx of assets could trigger a dramatic shift in multiple aspects of their lives. Not to mention, it may exacerbate frictions among siblings. For example: Let’s say there are three millennial siblings of a successful entrepreneur. One became an artist, one a social worker, and one worked for years with the founder running and building the business. Should all three receive an equal share of those millions?
And on a much larger societal scale, will this influx of money into the hands of the already wealthy worsen the widening divide between the different financial strata in our society?
In short, the “Great Wealth Transfer,” like all things in life, has many layers and subtleties that need addressing. And the best place to start is to sit down, now, with all family members in attendance, and with a proven financial professional guiding the discussion.
