YahooNews senior editor Mike Bebernes ominously proclaims, “America’s ‘Great Wealth Transfer’ is underway. How will it impact the country?” It turns out to be something rather routine.
As a generation, baby boomers, those born between 1946 and 1964, have done very well for themselves.
Blessed with the good fortune to have entered adulthood at the start of an era of exploding housing values and sustained stock market growth, the roughly 20% of Americans who fall into the boomer generation have amassed $80 trillion in cumulative wealth — nearly as much as all other living generations combined. With the oldest boomers now approaching 80, some of that wealth has started to be passed down to younger generations, marking the early stages of what’s become known as the “Great Wealth Transfer.”
In the coming decades, economists estimate that the children of boomers, most of them millennials born between 1981 and 1996, stand to inherit as much as $70 trillion to $90 trillion in real estate, stock, cash and other assets in the U.S. alone. It’ll be enough to make millennials “the richest generation in history,” according to one recent analysis.
So . . . old people are dying and leaving money to their kids? The horrors!
Yes, the oldest Boomers (including Presidents Bill Clinton, George W. Bush, and Donald Trump) were born in 1946 and have or will turn 78 this year. The youngest, born in 1964, have or will turn 60; most of them should have a lot of years ahead of them. So, even though the Boomers were a huge generation, the transfer of wealth will be slow.
I’m also struggling a bit with Bebernes’ (actually, likely KnightFrank’s Liam Bailey‘s) math. The early Boomers presumably mostly had kids when they were in their 20s, so roughly 1966 to 1976. That would make the kids Xers, not Millenials. The parents of the oldest Millenials, assuming an average age of 25, would have been born in 1956 and just hitting retirement age.
Not everyone stands to benefit, of course. The wealthiest 10% of Americans hold the lion’s share of the country’s assets, so their heirs are in position to take in the majority of the wealth that will be passed down.
Sure. Then again, many of the super-rich, who hold a stunning share of the wealth, are relatively young and aren’t going to be transferring that wealth any time soon.
But that still leaves tens of trillions of dollars that will be transferred to the children of middle-class, and even some lower-class, boomers.
The amount of wealth that’s set to change hands is so massive — two or three times America’s annual gross domestic product — that experts say it will have an impact not just on the economy, but also on our culture and politics.
That strikes me as a stretch. Yes, it’s a ton of money. But it’s going to be transferred over a very long period of time. And, again, inheriting money isn’t something the Boomers invented.
Some experts view the Great Wealth Transfer as millennials’ best hope for making up the economic ground they’ve lost after enduring two recessions, the coronavirus pandemic and recent cost increases that have made things like homeownership increasingly out of reach. With their increased wealth, millennials — along with some Gen X-ers (born 1965 to 1980) and Gen Z-ers (born 1997 to 2012) — will have the buying power to shape the country to fit their tastes and political worldview.
Again, it’s going to be a long time before Millenials start inheriting money in drives. And I suspect most Xers who are going to buy a house have already done so.
But others fear that the Great Wealth Transfer will only serve to further entrench inequality by ensuring that only the children of the well-off benefit from the gains made by older generations. Many in that camp argue for stronger inheritance taxes to help distribute boomers’ wealth more equitably throughout the country.
Wealthy people put their assets into trusts to shield them from inheritance taxes. But, yes, families with the wealth to do so tend to invest a lot of money into their children throughout their lifetimes, giving them substantial advantages over those whose parents can’t do so.
Click this link for the original source of this article.
Author: James Joyner
This content is courtesy of, and owned and copyrighted by, https://www.outsidethebeltway.com and its author. This content is made available by use of the public RSS feed offered by the host site and is used for educational purposes only. If you are the author or represent the host site and would like this content removed now and in the future, please contact USSANews.com using the email address in the Contact page found in the website menu.