The Great Wealth Transfer: Baby Boomers

The baby boomers capitalized on an unprecedented 40-year rally in stock and housing prices. Now, those babies are bequeathing on an equally epic level.

According to financial market intelligence firm Cerulli and Associates, baby boomers and the Silent Generation (preceding boomers) will pass down $84.4 trillion in assets through 2045, with $72.6 trillion going directly to heirs.

The Bank Administration Institute says it will “end up as the greatest transfer of wealth in history.” So, how, exactly, do tens of millions of people pass on tens of trillions of dollars? Let’s examine the situation.

Boomers are handing down the lion’s share of the wealth — $53 trillion or 63% of all transfers. The Silent Generation will hand down $15.8 trillion, mostly over the coming decade.

Ultra-high-net-worth households in the top 1.5% will account for 42% of the Great Wealth Transfer — about $35.8 trillion.

That last part shouldn’t be surprising. The rich have always passed estates down to their heirs, but over the last few years inheritance has gone mainstream.

The research and benchmarking firm Hearts & Wallets surveyed nearly 6,000 households and found that in 2022, 60% had received, planned to receive or planned to leave inheritances like property, investments and cash, including 54% of households with less than $100,000 in investable assets.

The Baby Boom generation is identified with those Americans born in the years 1946 to 1964. Nearly 76 million Americans were born in those years. US birth rates surged in tandem with an enormous leap in prosperity after the Depression and World War II.

Baby Boomers Own Nearly Half The Wealth In U.S.

Yet while Millennials are the largest generation, Baby Boomers own most of the wealth in this country – almost half of it as a matter of fact, according to the Federal Reserve.

Notice also that Millennials own fewer assets than Generation X and the Silent Generation.

Baby Boomers have an average net worth between $200,000 and $255,000, according to the Federal Reserve’s Survey of Consumer Finances.

With the average net worth at $200,000-$250,000 this means half of Boomers have total assets less than half that. Many may not have much to pass down to their heirs after their debts are settled. So, who is going to give the bulk of this $84 trillion which is due to be inherited?

Answer: The wealthiest 10% of households will be giving the majority of the riches. Within that range, the Top 1% – which holds about as much wealth as the bottom 90% and is predominantly white – will dictate the broadest share of the money flow. The more diverse bottom 50% of households will account for only 8% of the transfers.

In 1989, total family wealth in the United States was about $38 trillion, adjusted for inflation. By 2022, that wealth had more than tripled, reaching $140 trillion. Of the $84 trillion projected to be passed down from older Americans to Millennial and Gen X heirs through 2045, $16 trillion is expected to be transferred within the next decade.

Increasingly, heirs don’t need to wait for the passing of elders to directly benefit from family money – a result of the bursting popularity of “giving while living” – including property purchases, repeated tax-free cash transfers of estate money, and more – providing millions a head start.

It’s no longer “an oncoming phenomenon,” said Douglas Boneparth, a financial adviser whose New York firm caters to affluent millennials. “It’s present-day.”

And it’s already impacting the broader economy, greasing the wheels of social mobility for some and leaving obstacles for those left out as the cost of living, housing and raising families surges.