A study shows that Millennials will hold five times as much wealth as they have today and the group is anticipated to inherit over $68 trillion from their Baby Boomer parents by the year 2030. This will represent one of the greatest wealth transfers in the modern times.
Post-Boomer generations have had to wrestle with issues not encountered by their parents and grandparents. Burdensome college debt that serves as a financial anchor, costly real estate, the high cost of insurance and the challenge of procuring well-paying jobs have all been anathema to Millennials. These and other issues have made their lives more difficult than their parents' generation. Their fortunes will soon dramatically change for the better. They stand the chance to become one of the richest groups ever.
There are approximately 618,000 Millennial millionaires, according to WealthEngine data, as part of a study compiled by real estate firm Coldwell Banker. Millennial millionaires make up approximately 2% of the total U.S. millionaire population. The majority of Millennial millionaires have a net worth that ranges from $1 million to $2.49 million and fall between the ages of 34 and 37. Due to inheritances, trusts and estate planning, there will be a steady flow of Millennials getting very rich soon. Since the Millennial generation is smaller than the Boomers they're inheriting from, the wealth handed down will be highly concentrated. Ironically, this could contribute to increasing wealth inequality.
The Baby Boomer parents possess a massive amount of wealth. Many of them were beneficiaries of a great economy, which offered plenty of safe and well-paying jobs. Baby Boomers also benefited from a meteoric rise in the stock market and substantial gains in real estate. The values of their homes have risen exponentially over the years.
"The difference between the millionaires of the early 1980s and the ones being created today is that many of them stand to inherit even more wealth from their Baby Boomer parents, who are considered the wealthiest generation in history," the Coldwell Banker report concluded.
It won't be smooth sailing for both generations. There has been tremendous growth in the value of stocks, bonds and real estate over the years. Job security and career advancement has been on an upward trajectory for the Boomers. This doesn’t mean that the trend will last forever. There will most likely be a correction or recession in the future, as it's a usual part of the market cycle. With anxiety over outliving their wealth, Boomers may elect to stay longer at their jobs and hold onto to their money rather than giving it to their children while they’re still alive.
Advancements in technology, artificial intelligence, robotics, intense global competition and relocating jobs to other countries may adversely impact job security and the upward mobility of Boomers. This may lessen the amount of money that will be handed over to their children. Also, the devastatingly high costs associated with late-in-life health issues could easily wipe out a Boomer’s accumulated wealth fairly quickly. Taxes—varying from state to state—could take a big bite out the inheritance. The recipients of the money will have to worry about how to manage the inheritance, which is not so easy. Coming into a lot of money is nice, but managing it is hard, complicated and risky.
This unprecedented hand-off of incredible wealth from one generation to another will substantially change the lives and fortunes of many Millennials. It will also have major ripple effects through the economy.
This article originally appeared on Forbes.
