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Millennials and Gen Z can lose out on large inheritances as their parents choose to spend them instead

Millennials and Gen Z can lose out on large inheritances as their parents choose to spend them instead

Millennials and their younger cohort have been waiting for there to finally be a seismic shift in the hands that shift wealth. As the Baby Boomer generation, born between 1946 and 1964, retires from the workforce, they are beginning to think about what to do with their assets.

However, to the chagrin of their children, boomers plan to spend their money rather than save it for inheritance.

A recent Charles Schwab survey of more than 1,000 high-net-worth Americans—those with more than $1 million in investable assets—found that instead of saving all of their wealth for future generations, 45 percent of boomers plan to saddle enjoy their wealth alive.

They anticipate leaving behind a smaller legacy for the next generation than the average millionaire in the United States. The report indicates that Boomers plan to transfer about $3.1 million, while an affluent plans to transfer about $4.1 million.

They are equal increasing their expensesunlike other generations that are shrinking due to economic pressures, according to research from Bank of America.

Many of them have not felt the impact of high interest rates and house prices as badly as younger generations and have even benefited from themcontributing to the increase in their consumption.

Boomers are the richest generation in historywhile Millennials have been identified as the “biggest losers” in wealth accumulation due to a series of ongoing crises, Allianz’s Global Wealth Report 2024 found.

This older generation has amassed significant wealth due to the exceptionally favorable economic circumstances of the post-World War II era. They have been able to accumulate assets without the financial constraints that younger generations face, such as student loan debt and inflated housing costs.

Boomers strategically benefited from an extended 40-year period of robust growth in both stock and real estate valuations, which allowed them to build substantial financial portfolios.

There’s still big money at stake

Millennials have tried to save money amid a series of extraordinary economic hardships, such as the 2008 financial crisis, the Covid-19 pandemic and the highest inflation rates since 1981.

These turbulent economic conditions have dramatically undermined their financial growth, resulting in substantially lower investment returns compared to previous generations. Consequently, the total amount of savings that Millennials have accumulated over their lifetime is considerably smaller and less substantial than that of their predecessors.

As Boomers and their parents – the Silent Generation – prepare to transfer an estimate $84.4 trillion in assets by 2045with $72.6 trillion going directly to their heirs, Millennials are still poised to benefit considerably.

This massive transfer of wealth could boost the financial position of Millennials five times by 2030. Such an influx of wealth could lead to improved financial stability, increased opportunities for home ownership and a reduction in their debt.

In particular, this inherited wealth could allow millennials to pursue careers they find fulfilling or start their own businesses, rather than staying in jobs for purely financial reasons.

Gen Z, however, has strong potential to outperform all previous generations in financial performance – if they align their savings habits with today’s economic realities, according to Allianz.