Introduction

The Age of Inter-generational Wealth Transfer

According to the current statistics, the next 20 years will see the greatest transfer of wealth from Baby Boomers that the U.S. has seen yet.
Golden piggy bank, showing the wealth of previous generations

The Age of Inter-generational Wealth Transfer

Golden piggy bank, showing the wealth of previous generations

According to the current statistics, the next 20 years will see the greatest transfer of wealth from one generation to the next that the U.S. has seen yet.

Why is this happening now?

It’s all about timing. The Baby Boomer generation, born from 1945 to 1964, came into the world after the end of World War II. All the factories and machinery created to fight and win the war was retooled to fuel the growth of prosperity in the U.S. The “Greatest Generation,” as they are now called, switched their focus from war to peacetime and families.

The Boomer generation was born into this era of prosperity and wealth and rose its wave of economic expansion. The G.I.’s who came home from the war and married, working hard to enjoy the fruits and aftermath of the war, gave birth to this new Boomer generation in unprecedented numbers. The Boomers are named such because of the explosion of births – the boom of babies.

And they grew up in a time full of opportunity. College was more affordable and achievable than ever before and for those who didn’t go to college, manufacturing jobs were available, too. Industry flourished in the 1950s and 1960s. And with it, the middle class blossomed further.

In the 1970s and 1980s, the world of finance exploded to meet the needs of those with greater American dreams. Loans for cars, homes, and education expanded. As the globe shrunk and financial markets encompassed more nations and goods, the wealth of the upper classes grew. New financial instruments were created and used to generate more wealth. New investment funds generated more wealth.

The Baby Boomers Have Aged

Those Baby Boomers, born in 1945, turn 75 years old in 2020. They’ve been retiring for the past 10 years (or so) and the more financially successful ones are living their “golden years” as planned. But they won’t live forever and so many have planned ahead, creating their wills and putting their money into family trust funds for distribution once they are gone.

The current life expectancy for men is 76 years and for women, 81 years, and with women having longer life expectancy, they will be inheriting or otherwise coming into the wealth, accumulated during these lifetimes, of their husbands. This is the beginning of the great wealth transfer: from husbands to wives, from parents to children.

Boomer parents may also be alive – given these life expectancies – so Boomers may also be inheriting the wealth of their Greatest Generation parents. And the aging process continues for the rest of the Boomers. The youngest – born in 1964 – turn 56 in 2020. They, too, see retirement on the horizon.

The Great Wealth Transfer – to Gen X’ers and Millenials

All of these accumulated riches in the U.S.: homes, retirement accounts, as well as savings and trusts, will be moving down from the hands of the current generation to the next generation. This is creating the greatest wealth transfer the U.S. has ever seen. Who will be receiving these funds? The next generation, of course: Gen X’ers (born 1965 – 1980) and Millennials (born 1981 – 1996).

This is where wealth and financial advisers play an interesting role. How will they address this wealth transfer from men to women, from one generation to the next? What is going on in these intergenerational conversations? How are older wealth advisers introducing their younger staff into these client relationships?

The Intergenerational Divide at Work

I’ve written before about the divide in the workplace between Baby Boomers and Millennials. This phenomenon, playing out now and for the next 10 years, as Boomers retire, is taking place not only in the area of marketing but also in the area of finance. It’s important to recognize that good relationships and communication patterns are fostered in the workplace, where generations work side-by-side, as well as between clients and their trusted advisers, be they marketers or wealth managers.

Not sure how to foster these healthy inter-generational relationships? Contact me and let’s talk.