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This really shouldn't be a surprise; it's been predicted for at least a decade that as the Boomer generation dies off it will trigger the biggest inter-generational transfer of wealth in history.
This is true but I expect my kids, who are older millennials, will use a good part of their inheritance to help their own kids.
We hope to be around for at least another twenty years, by which time the older kid will be 65 and probably won’t have too much need of our money.
My grandsons are millennials, and their mother (my DIL) has a nice multi-million $$ estate, but she's still a relatively young woman, so they could be in for a long wait. They know not to expect much from Grandpa - a dozen or so old Harley t-shirts and a few unpaid doctor bills....
Mama may have, Papa may Have
But God bless the child that has his own
- Billie Holiday
I think it is cause for concern. The more distance there is between wealth and what the wealth creation is/was, the more likely it is for destruction. Pundits may disagree, but real wealth is made by creating a good or service that is beneficial to many people. If boomer parents created said wealth by running a business, the sale of the business becomes a risky event for everyone except the seller. The buyer may not run the company well. The employees may lose their jobs or opportunities. The customers may find the expertise relied upon gone. Now, there's nothing to say a founder may not grow tired or beyond their element either, but the amount of wealth tied up in a business does keep the two tethered together. Sell that business to a VC fund of some sort (seemingly increasingly common) and the liquid proceeds go off to those completely uninvolved in further development, often for a remaining life of consumption. That business interest is replaced by hired executives who can make this business work...or if they mess it up simply bounce to the next place.
One anecdote told quietly to not be overheard at a Corporate once upon a time was a CEO that did a handshake deal to acquire a small regional distributor. Then he got busy with other things and forgot to tell anyone meaningfully. By the time anyone actually went to the business, the place was shuttered and all the employees were gone. Another VC company flipped the pricing and value matrix without any meaningful investigation of a company they bought. It didn't work, but they didn't want to change course. Then they shuttered the company when it started to lose money. The business had been there about 30 years. It was part of a portfolio, and because there were fewer losers than winners, and because they loaned money to the divisions in order for them to pay out dividends, they had a great story to sell to investors, who flooded them with too much moeny that they could not invest quickly enough and over which they had poor plans and insurfficient oversight to actually manage.
Now, there's the argument that creative destruction gives rise to new entrepreneurs, and sometimes that is the case. But sometimes it's just poor families that have a dip in financial situations that take much longer for them to recover from than other families.
Perhaps I'm going too far here, but the Bible gives examples (albeit somewhat conflicting) that hoarding is not good. After all, the financial system works best when capital is in the hands of those that are using it to create new and better. With banking efficiency and financing alternatives, I suppose this argument against hoarding is now much weaker than in the days of hard currency, but lottery winners or inheritence receivors that have no use for the money, no understanding of what it took to arrive at such a sum or and no idea on how to replace and use such wealth have a rather terrific education ahead for them. Not doing so costs more than just themselves. It costs society when wealth becomes too idle.
That being said, if the world population is set to shrink, with ever smaller numbers of young caring for ever larger numbers of old, I suppose it would only make sense that wealth will aggregate in future generations....until labor itself is confined to the capacity of the robots available.
Yes, but don’t forget us Gen Xers in the middle!! I expect to receive a significant inheritance some day as my boomer age parents have done very well in life. It won’t change my lifestyle any, I have all that I need, and I plan to pass everything on down to my kids, who span the millennial and Gen x generations.
My question to the younger generations who do receive substantial inheritances is…will you be passing it down as well?? Do the millennials and Gen Xers think about leaving a legacy for their kids, or will the YOLO mindset that seems so prevalent today rule them their entire lives?
I am a gen-xer and my kids are in high school.
I teach my kids, first and foremost, to respect their elders because that is part of our culture and I agree with those values for the most part in any case. Specifically, that means you do whatever you can to help the elderly in your family, regardless of your own circumstances.
Now, when it comes to finances, I teach my kids that money is a precious commodity and it is something we try to grow in our own lives and pass on from generation to generation. Saving and investing are of the utmost importance.
At the same time, we want to live comfortably and enjoy some of the finer things in life. Therefore, you have to earn a lot of money because otherwise you will run out of it.
The larger issue is a family's values & culture with respect to wealth. Many people who inherit wealth are not equipped with the tools to manage that wealth nor the value system with respect to that wealth.
well, I don't want to sound that I am supporting irresponsible behavior BUT if they are going to squander their inherited wealth by spending in the economy then those of us who own substantial assets in the stock market benefit so spend AWAY I must say.. I think the Millennial term for this is YOLOing
I honestly hope the millennials end up being the wealthiest generation.
For them to be that way, my generation (50's to 60's) will see decreased inflation and a booming stock market.
So far, the millennials are very smart, especially in technology. But they didn't show much sense taking on so much student loan debt and they're still having to live in their parents' basements. Throw in a $750 average car payment and they're behind the 8 ball economically.
But the way the world has recently gone, this Ole Mom and Pop are going to spend all our money. Our 3 kids shouldn't be looking to inherit more than some really beautiful furniture and a few handmade oriental rugs. We're spending our extra funds touring the world on vacations--40+ such trips so far.
Sorry kids, but you were provided educations without debt. And you've been given the chance to save for your retirement.
The oldest Millennials are in their early 40s. The youngest are 28. If you aren't over your parents' basement by your early 40s, there's basically no hope for you.
I'm 37. I don't know anyone my age still living with their parents. Most haven't in many years.
Yes, but don’t forget us Gen Xers in the middle!! I expect to receive a significant inheritance some day as my boomer age parents have done very well in life. It won’t change my lifestyle any, I have all that I need, and I plan to pass everything on down to my kids, who span the millennial and Gen x generations.
My question to the younger generations who do receive substantial inheritances is…will you be passing it down as well?? Do the millennials and Gen Xers think about leaving a legacy for their kids, or will the YOLO mindset that seems so prevalent today rule them their entire lives?
Gen X here. We’ve never counted on any sort of inheritance, due to the poor money management of my in-laws. Depending on who passes on first, we’ll either inherit a house in sellable condition… or a house that looks like something out of Grey Gardens. The proceeds (after paying off whatever they still owe after nearly 50 years of ownership) will go into a trust for a wastrel sibling who has chosen to do nothing but suck up oxygen.
As for our own children, their legacy is a paid-for education, college funds for their children, and whatever remains of our estate.
37 yo and have been debt free (except for mortgage) since I was 30. My mortgage should be paid off in less than 5 years.
I max out my 401K, Roth and HSA along with most of my colleagues. I drive a 2012 Nissan.
I never knew anyone in my age group that lived in their parents house after they were done with schooling.
I bought my parents the book "Die With Zero" a few years ago and hope that the last check they write bounces.
37 yo and have been debt free (except for mortgage) since I was 30. My mortgage should be paid off in less than 5 years.
I max out my 401K, Roth and HSA along with most of my colleagues. I drive a 2012 Nissan.
I never knew anyone in my age group that lived in their parents house after they were done with schooling.
I bought my parents the book "Die With Zero" a few years ago and hope that the last check they write bounces.
You live in a low COL state.
That may be a wise decision if you can land a good job there.
Once again, everyone ignores Gen-X. Gen-X is a small generation and will have far fewer siblings to split the inheritance with.
Gen-X will inherit the most boomer wealth and probably retire early, which will open up things for Millennials.
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