Key Points from 24/7 Wall St:
- Baby Boomers are holding onto $105 trillion in wealth that is expected to transfer to heirs by 2048.
- Baby Boomers are less likely than other generations to believe passing on their money is important.
- Close to half of Boomers said they plan to enjoy their money during their lifetime.
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Baby Boomers are sitting on a huge pile of cash, with The Cerulli Report revealing that older generations have an estimated $105 trillion in wealth that’s expected to flow to heirs by 2048.
Unlike members of other generations, though, Boomers are not eager to part with their assets. In fact, recent research from Scwab shows Boomers have plans for their money that are far less generous than those of wealthy millennials, wealthy GenXers, and high-net-worth individuals as a whole.
Let’s take a look at what Boomers are planning, to understand why the label stingy may very well apply.
Baby boomers aren’t prioritizing their heirs — and aren’t eager to hand over their funds
According to Schwab’s data, Baby Boomers are exhibiting some pretty selfish tendencies when it comes to their money. Specifically:
- Just 34% of wealthy boomers think it’s important to preserve money for the next generation after their passing, compared with 45% of wealthy Gen Xers, 32% of wealthy millennials, and 39% of all wealthy Americans (defined as having $1 million or more in investable assets)
- Only 21% of wealthy boomers said they want the next generation to be able to enjoy their wealth while they are alive, compared with 44% of Gen X, 53% of wealthy millennials, and 36% of all high-net-worth individuals.
- While 56% of Boomers said they plan to distribute some of their assets during their lifetime and 73% plan to distribute some after their death, this is far short of younger generations, 97% of whom plan to give away property while alive and 97% to 98% who are planning a post-death distribution.
So, what do Boomers want to do with their money if they aren’t eager to give it away? A total of 45% of them said they want to enjoy their money during their lifetime, compared with 15% of millennials and 11% of Gen Xers who prioritize doing the same.
Are boomers being too selfish with their funds?
It’s easy to look at these numbers and be shocked at how few Boomers want to give the next generation a leg up with a financial gift. Of course, there’s a large cohort of experts who say that Boomers have been prioritizing their own interests for decades, supporting policies that restrict the supply of new housing to keep property values elevated and supporting cuts to their taxes even as the government runs up large deficits.
On the flip side, though, the Money Across Generations II study from Ameriprise Financial revealed that 93% of baby boomers provide financial support to their adult children. Since so many Boomers are already offering financial help, they may not think they need to provide even more assistance in the form of direct wealth transfers during their lifetime or after their death. The fact that so many younger generations are struggling to buy houses, repay student loans, and find the funds to start families should give Boomers reason to doubt that theory, though.
The reality, of course, is that Boomers are free to do what they want with the money they have spent a lifetime acquiring — even if this means not making gifts while they’re still alive or focusing on spending money rather than leaving an inheritance. Given the challenges their children and grandchildren face, though, there’s a solid argument to be made that stepping in to offer that extra financial support now could make a profound difference in the happiness and security of future generations.
Boomers who do decide to offer financial gifts during their lifetime also get the benefit of watching their children or other heirs put those funds to good use, which is something it’s hard to put a price on.
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