Boomers Dying Out Could Lead To A Colossal Transfer Of Wealth

© Getty Images A picture from generation to generation

• Per year by 2030, Millennials are expected to inherit more than $68 trillion from Boomers, making them five times richer than they are today.
• Experts told Newsweek that the massive wealth inherited by millennials may be reducing the generation gap in the United States, but worsening it overall.
• The wealth of millennials, a generation weakened by the ongoing recession, expensive real estate, and high student debt could dramatically change America's financial and political landscape.

According to Fortune, baby boomers, who were born into the Revolutionary Revolution two decades after the end of World War II, are now the wealthiest generation on the planet, with an average of $1.2 million in baby boomers.

But as baby boomers approach their prime years, experts are asking an important question.

Research shows that millennials will own five times as much wealth as they are today, and the group is expected to inherit more than $68 trillion more than their Boomer peers by 2030.” — Morley Winograd, author of three books on millennials. Newsweek , citing Caldwell Banking Study 2019.

"This will be one of the wealth transfers of our time."

Even now, millennials, who have already experienced two recessions in their lives, can't match the financial boom boom; The older generation has an average wealth of 12 times that of millennials, with an average net worth of $100,000.

This is largely due to how the work and financial situation has changed over the past few decades. According to a recent report in The New America, millennials in the United States earn 20 percent less than their older counterparts. This has exacerbated the generation gap, which according to MagnifyMoney research has doubled in the past 20 years.

According to a 2020 Boston Consulting Group (BSG) survey, American Boomers alone own more than $53 trillion of the total global personal wealth of $431 trillion. The collective wealth of boomers is expected to grow in the future. In the coming years, Forbes reports that between 2020 and 2025, global financial wealth is expected to grow by $65 trillion, more than $500 trillion.

The expected shift of wealth from investors to millennials (a much smaller group than before) will eventually close the gap in wealth inequality between the two generations, even as overall wealth inequality worsens.

How Much Money Will Millennials Inherit?

While millennials may be in a relatively weak economic position right now, a study by research and advisory firm Ceruli estimates that $84.4 trillion will be passed on to the younger generation by 2045, most of it in the form of inheritance. According to the report, $72.6 trillion of the total wealth transferred is expected to be inherited within 25 years, and the rest is expected to go to charity.

This could be the largest transfer of wealth in human history, although some suspect the event will be very significant. Many analysts have pointed out the number of retired people in debt.

"They're the first generation to experience the 401k," said Kathryn McKay, associate director of the Financial Security Program (FSP) at the Aspen Institute .

"Now we are responsible for our savings. And we know that a lot of people will retire without enough money to live the expected number of years. Whether they own all of those assets or they have to use those assets outside of retirement accounts."

Jason Fichtner, vice president and chief economist at the Center for Bipartisan Policy, told Newsweek that millennials' wealth gains in the 2000s depend in part on what US lawmakers do to address the Medicare and Social Security crisis. . .

Recent projections say that the Social Security trust fund will run out by 2033, the same years that millions of people are expected to inherit their parents' wealth. Failure to act by Congress to reform the American retirement system, such as raising taxes or cutting benefits, may affect millennials more than any other generation in the coming decades.

But Fichtner also doubts that the expected transfer of wealth from boomers to millennials will benefit the younger generation. "Millennials don't need to rely on their parents' retirement savings because the fair distribution of wealth in this country is disproportionate," he said.

"I think that's a very bad sign for millennials because, again, it depends on the family structure. Some very rich families have money to leave their kids. They have money to support themselves and to retire, and they can ask their kids to pay for their housing and Medicare. So that's going to be an added burden." On the current generation of millennials.”

Experts agree that this large-scale transfer of wealth will not be "distributive," meaning that the money will go mostly to millennials who are already well off, while those who are struggling are unlikely to see their stocks suddenly grow.

"Overall, we don't expect it to have any distributional characteristics in terms of creating a more egalitarian feeling," Chase Horton of Ciroli told Newsweek . “If anything, we would expect the transition to millennials and younger generations, who will inherit most of their wealth, to be unfair overall.”

And wealthy white millennials have mainly benefited from this massive transfer of wealth. But the money inherited by this generation is expected to create a lot of excitement in the country. Will money change the values ​​of millennials, or will they use that wealth to support ideals that differ greatly from those of older adults?

How will millennials change the financial and political landscape of America?

Winograd, who wrote a book on how millennials are shaping America, argues that the wealth inherited by younger generations has shifted the American political landscape to the left, and generally embraces the liberal values ​​of millennials.

In the 2022 US midterm elections, 56 percent of millennials voted for the Democratic Party.

“When they get rich, whether from the money they inherited from their wealthy parents or from the growing leadership of business in the United States, they can use not only market power, but financial resources on the ballot to push American politics in a more liberal, democratic direction.”

Millennials can use their money to shape the financial market by investing in projects that promote their ideals and values.

“Millennials invest in companies that follow ESG (Environmental and Social Stewardship) practices, like companies that think long-term about how what they do impacts the environment and society,” Wayne said. .

As a result, ESG assets will exceed $50 trillion by 2025. That's about a third of global assets under management, according to Bloomberg. With more assets invested than spent, ESG assets represent the most assets under management in the world, doubling their dollar value over the next 20 years.

Previous research by colleagues at the Aspen Institute has shown that millennials are already looking to invest in something outside the traditional stock market, McKay said, in an effort to fund the same great companies that contribute to issues like climate change.

Overall, Winograd believes that "as the great Wall Street moguls continue to distance themselves from the beliefs and values ​​of the older American generation, their world may be disrupted by millennials' desire to harness government participation in the economy." . Creating a more just and equal society.

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