The Great Wealth Transfer represents one of the most significant economic shifts in modern history, with an estimated $124 trillion expected to pass from older Americans to heirs and charities through 2048.1
This massive transfer of assets, primarily driven by baby boomers and the Silent Generation, is already underway and will accelerate over the next decade. Millennials are poised to inherit the lion's share of wealth over the next 25 years ($46 trillion), Gen X will dominate the next decade, inheriting $14 trillion, compared to Millennials' $8 trillion.
The Great Wealth Transfer encompasses not just financial assets but also real estate, businesses, and investment portfolios that have been built over decades of economic growth. The sheer scale of this wealth movement will reshape investment patterns, consumer behavior, consumption, and economic priorities as younger generations gain control of these resources.
However, there's a concerning disconnect between expectations and reality that the next generation must be prepared to address. A large part of this discrepancy stems from parents not effectively communicating financial matters with their adult children, which has the potential to create a dangerous gap in preparation. While 68% of Millennials and Gen Zers either have received or expect to receive an average inheritance of around $320,000, many may be overestimating what they'll actually receive.2
This expectation gap can lead to poor financial planning if younger generations assume their financial security is guaranteed through inheritance rather than building their own wealth foundation. Often overlooked is the reality that healthcare costs, extended lifespans, and changing priorities among older generations may significantly reduce the actual amounts transferred.
To be successful in this environment, the next generation needs a comprehensive framework that will not rely solely on inheritance expectations:
- A premium should be placed on prioritizing financial education and literacy, understanding investment principles, tax implications, and wealth preservation strategies before wealth arrives.
- Proactive family communication is essential – parents initiating open conversations with children about estate planning, values, and expectations can prevent often costly surprises and enable better preparation.
- The next generations should focus on building their own financial foundation, not relying on inheritance, through career development, savings, and investments.
The younger generations should be guided to proactively define their financial ambitions, taking into account the potential for their inheritance not just to preserve wealth, but to catalyze significant long-term growth. Unlike the Boomers, the Millennials and GenZ have hurdles to creating their own significant wealth- high cost of living and competitive job markets that have not kept pace with inflation.
This, in aggregate, has impeded the ability of Gen Z and Millennials to properly start to save for retirement as it is estimated that they will need $3million set aside to retire comfortably.3
Finally, this cohort will need an understanding of wealth preservation principles like diversification, tax planning, and prudent spending to ensure that any inherited wealth grows rather than dissipates.
Those who prepare strategically will be positioned to maximize this historic opportunity, while those who remain passive may find themselves unprepared for the opportunities and responsibilities that come with significant wealth.
Footnotes
1: Financial Advisor Magazine December 2024
2: Oxygen financial 8/11/2024
3: Granite Harbor Advisors
