It's long been known that Gen Xers and millennials are set to inherit trillions from baby boomers over the next two decades via the Great Wealth Transfer. The bad news, however, is that not everyone will receive an equal piece of the payout.
After accounting for taxes, baby boomer retirement spending and other factors, a July Visa Business and Economic Insights report estimates that "$36 trillion will pass to younger generations over the next 20 years, equivalent to roughly $515,000 per inheriting household (1)."
Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here's what it is and 3 simple steps to fix it ASAP
Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going
But there's a caveat: "these transfers will be highly uneven."
In fact, the report says that "nearly 75% of those benefiting from the wealth transfer already have a higher net worth." In other words, it's the rich passing down to the rich. Conversely, baby boomers who still carry mortgage, consumer and loan debt "have far less financial flexibility — and potentially less wealth to pass on."
The good news, however, is that financial experts tell Moneywise that there are ways to make even a small inheritance pay off in the long term.
"While a smaller inheritance may not feel life-changing at first, it can still make a meaningful difference when it's used intentionally," Jessica Nino, a financial advisor with Edward Jones, told Moneywise. "Even a few thousand dollars invested thoughtfully and allowed to grow over many years can have a much larger impact than people might expect."
The idea that the Great Wealth Transfer will largely concentrate among the already affluent is not entirely surprising.
A 2024 Congressional Budget Office study found that, between 1989 and 2022, "family wealth was unevenly distributed, and that inequality increased (2)." Families in the top 10%, they reported, "held 60% of all wealth," while everyone below them held 39%.
Breaking it down further, the American Society on Aging pointed to Federal Reserve data that shows that white households control more than 80% of the wealth in America, while only 3.3% is held by Black households (3). As such, they add, "the trillions of dollars now set to pass between generations will replicate, rather than dismantle existing hierarchies" and a racial wealth divide (4).
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
