An interesting development has started to take place in the economy and will ramp up over the next two decades to a peak, which will completely change the structure of society today. Because while there are plenty of complaints ab out how the boomers own everything, the fact is, the secret to eternal life hasn't been found and they are going to start rapidly dying out, passing their wealth onto firstly spouses, and then children and grand children. Most will go to Gen-X and Millennial generations.
The Boomer generation is the wealthiest generation in history driven by economic growth and asset appreciation, which will make this the largest transfer of wealth in human history. The amounts are hard to pin down precisely, but it will be between about 80 trillion and 140 trillion dollars, and it will fundamentally change the flow of money in the economy.
For the better?
Potentially, but not necessarily.
Firstly, one of the things that is going to happen is that women are going to get significantly wealthier on average, at least to begin with. This is because women on average outlive men, so the boomer husband is likely to die earlier than the wife. That also means that at least for a short while (given their age), the widows will control significant amounts of money. This means that they will be large asset holders that could change the flow of personal wealth.
Not only this, roughly half of the children inheriting the money will also be women, which means that while there might have been an earnings gap at some point, the percentage gap could close dramatically. And again, the average woman tends to invest differently to men, opting for lower risk and lower return investments, that tend to outperform the average man over a long period of time, but can't attract the large percentage gains of high risk, high reward investments.
With the majority soon going to X and Millennial generations though, the big question is how they are going to spend the money, given that especially the millennials are struggling to own assets for themselves now and tend to have higher debt. This means that a lot of the money might go to pay down debt, but the fact is that people in debt also tend to be worse with their money. So even if the debt gets paid down, will the rest go into growth investments, or will it be "free money" that will be spent on unnecessaries?
I feel I know the answer.
But what this means is that there is going to be a huge amount of consumer demand on pretty much everything, which will drive up inflation, but will also be another massive wealth transfer. The inherited money that took a lifetime to collect, will probably take a decade or two to be captured by the 0.1% who are still invested in the supply chain. Of course, they will be dying off too, but their wealth is at a different level, as are the mechanisms they have put in place to ensure that it keeps growing, even after their death.
I might be wrong, but instead of this massive inheritance transfer evening the playing field a bit and giving people a chance to own more of their resources, it will end up supercharging the billionaire wealth growth, which already increased by sixteen percent in 2025 alone. And it is going to keep increasing at an increasing rate, because we are a world of consumers who now care more for how we feel right now, than how we are going to survive tomorrow.
While many won't admit it, we don't tend to value what we haven't worked for that much. And that includes the value of what our parents worked for. Granted, not all parents did well financially (mine were a disaster) so not everyone will inherit, but we have to look at the "on average" of it all, and how that is going to affect the average inheritor. People will be inheriting assets, not just money - which will mean family homes with three bedrooms, but they have no kids and they do have debt. Keep it and keep paying the property tax whilst still in debt? Or sell into a market that might have a lot of sellers? There might also be a lot of investment buyers, looking to buy the dip for rentals.
Whatever happens though, it is going to make for a decent amount of economic disruption that is probably going to see wealth consolidation like we have never seen before. Yet, I don't think it is going to make many lives fundamentally better, because rather than using the wealth to make this world a better place, most of the dollars spent will go down the drain, into the bottomless pockets of the wealthy.
There is a lot of potential.
But unfulfilled potential doesn't amount to much.
Taraz
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Again given the people I know, out of "everyone" that I know there's only a few that I can think of that would be quite likely to consider it "free money" and spend on unnecessaries they felt they were "due" or "were missing out on" after paying down debts. And even then I don't know how accurate that assessment is as for various reasons (some being that personality type) I don't know where they are now. Everyone else I know (bar some of the kids' friends whom I don't know well enough to say anything for sure about) would consider it "free money" after making some investments.
An even smaller subset out of that would likely just invest every single portion of whatever was left of the "free" money after paying down debts, J would be one of them but he has to keep me happy and I'm a bit over "never" being the "right" time to get a lot of the major works that we can't do ourselves done XD
Yeh not really when it's "normal" which was basically me growing up (and probably J too). We developed that appreciation as we got older and realised just how hard our parents had to work to go from literal poverty to where they got for us to have middle class childhoods (back when "middle class" was a thing) to where they are now.
While it's a type of understanding that would greatly benefit from being grokked younger, it's one of those things that's just got when it's got and with how tenaciously some people are clinging to all the wrong aspects of childhood some people might be "getting" it way too late if at all.
There is a mix with my friends, but most of them are women. They have generally done worse than their parents, but have also married men who have done okay and will inherit also. A few of them have done very well, despite their parents. I wish I could have married a rich woman who would pay for me! ;D
Did the appreciation come because you matured through life, having kids of your own etc? As you said, with so many younger people who are in their late twenties and early thirties, still partying like they are 18, Do they develop the appreciation at the same time you guys did, or will it come later? Later will be after they get an inheritance. Then what?
I have the great example of my mum to follow (she manages most if not all of the finances including the investments), unfortunately my brain had other things to say on the matter. She did try very hard to teach me how to be financially independent but my brain steadfastly refused to understand it until I somewhat forced an understanding about 2-3 years ago (literal major headache and I still don't fully understand anything). She did maybe a bit too well with my sister who is a bit too careful with her money XD but I don't think she does any investments and probably should, but I don't know how much of those she understands either.
You didn't gold dig hard enough! XD
I don't remember when it consciously registered but it was probably in my early 20s when I was learning how to characterise properly (project-related), which did also help me understand what family history I knew that little bit better. Coincidentally that's when the babies started happening so maybe that helped.
Maybe it just helps if you're able to think outside your own skull.
You are talking about me. Two daughters to a boomer couple where one died and she's got the wealth we'll inherit. Dad got a million bucks from Hardy Plank for his mesothelioma - plus they had decent super. He joked that she was a bitch for getting all his money to spend when he died (which was like a month after that - it's like winning tattslotto and knowing you can't spend a penny on it - he enjoyed a great pair of 10K speakers for like three months so he could at least listen to music).
She isn't spending it, and certainly not giving it away as she has that 'grown up poor' mentality of saving for a rainy day, so of course we stand to inherit a bit. Won't be of any use if we die before she does, or if she lives to 100. I joke about making her beef wellington...
For now, I'm poor - not penniless, but not rich either. We have to be careful with our money, but what's the point of working hard if we know we will likely hit 67 and have an inheritance anyway? God help us though if they change the rules like the UK where they take a fair chunk out of it (I think 40 percent?).
I'm really really fucking grateful to my parents. I know they worked hard, and Dad's work came at a cost of cancer (asbestos) and war (Vietnam). I would never take it for granted, and I hope that I can help my son buy a house, because Gen Y/millenial aren't as lucky as Gen X was with the property market/inflation.
They are changing rules here too. What they should instead do is make a tax-free threshold that encourages people to spend in the economy locally, rather than put it in government hands directly.
I think it is wise. The challenge for many of the ytounger gen in the future is that they won't have the same "financial hygiene" as older gen, so they are more likely to make money errors that will cost them.
We've discussed this before, but I think you are vastly overestimating how much money will actually be inherited by the working class...
... it won't be much at all.
The assets owned by the working class boomers will be spent on themselves... boomers will live 20/30 years past retirement so that eats up a ton of their wealth, and then medical expenses will essentially eat up the rest. Their kids won't inherit much, and the most likely scenario is that their kids will have to look after them in their last years as they run out of money.
For the majority, they'll have to financially look after their kids and their parents.
The vast majority of the wealth (I dunno, 90%) will be inherited by already wealthy families that won't sell off the properties or stocks. It'll be hoarded and not flow through the economy at all. You are absolutely right that the billionaires will grow in wealth over time, unless proper tax reform (ie, closing loopholes) are implemented.
Inflation will still rise, but not because of inherited wealth, but because of corporate capture of policy.
Damn
Damn, you said it, but I disagree... because it's true they'll spend on themselves, but a good chunk will still be left... stuck in titanic battles, and lawyers will win big from lawsuits and family disputes... there's a lot to gain there.
Being in the middle is complicated... taking care of parents and kids simultaneously drains the pockets. Thank goodness it's doable, but sometimes it pushes many straight into poverty. I hope to not be in that situation... but it's almost achieved since you're carrying burdens on top and below simultaneously, and the expenses are pretty strong
I really don't think a good chunk will be left. Not only are housing and healthcare costs rising in most countries and seniors spend a huge amount on healthcare in their last couple of years, but senior-living facilities are increasingly becoming more expensive AND some seem to have deals where seniors sign over all their assets to these centers - it basically means richer seniors help pay for poor seniors by pooling it all together... but the downside is that literally nothing is left to be inherited.
People funding 30 years of retirement while also dealing with inflation is super tough. I would guess that the vast majority of Gen X, Y, Z and A will inherit nothing of substantial value... you can see seniors already working way past normal retirement age (ie, Amazon Distribution centers) because of rising costs.
The Generational Shift
Oh my, I didn't know people had given away all their assets to charity... wow, that's unheard of.
If that's the case, that's serious... hmm, yeah, that other generation after the millennials, the ones who'll inherit now... will they destroy most of it or preserve it?
But yeah, the third generation, those ones... you are right, they're not prepared, and they haven't been educated to take care of family inheritances. I've seen that kids don't have the same respect for elders as we grew up with... or as we were taught
Yeah, I see many still working, all because they have to please their lazy kids or grandkids whose expectations are too high 💸.
Sorry Galberto, I think you misunderstood... I don't think large numbers of people are giving their assets to charity.
What is happening is that they are signing their assets over to Assisted Living Senior Residences, the places that elderly people go and they make all their meals and looking after them. These residences get all their assets in exchange for the seniors living there for the rest of their lives.
I don't think people are working past retirement ages because of lazy kids or grandkids - they are still working because they simply do not have enough to retire themselves.
Looking at some numbers, about 80% of boomers in Australia own their own house, most outright or with small mortgages left and boomers own 60% of Australia's housing wealth. That is a significant amount. As mentioned, wealth passed won't likely be cash.
I think you are vastly underestimating what is happening here. Those 80% owners aren't the very wealthy, they are just people who bought a while ago.
Hahaha, so the reality is probably somewhere in the middle of us both.
People can't eat their houses though.
I think the most likely scenario for those 80% is that the vast majority will have to sell their houses before they die to fund their remaining years... either into those Retirement Communities or into Assisted Living Facilities - left over funds will be spent on trips and/or healthcare... leaving not much, if anything, for inheritance.
I think the greater danger is Gen X, Y, Z, A will have to financially cover their boomer parents because they outlive their money.
The very wealthy will get the biggest inheritances in history and everyone else will have to manage to keep their kids and parents alive.
Where are these rich boomers of which you speak? My parents must have missed the line for that trait!
Mine were terrible with money... But those who were moderately good, should be okay.
Mine were decent with money, but my mom didn't work and my dad was a union autoworker, so while the wage was liveable, I wouldn't call them wealthy. He didn't believe in investments either, so what they have is what they have.
The Inheritance Game
My friend passed away and his grandkids want inheritance... and what do I see? I see them enjoying life with beers every weekend... what do you think they'll do once they inherit? Nothing, they'll squander it and live life to the fullest, left and right.
That's what'll happen... like I said, there's probably a lot of money in the middle, but they'll enjoy it trying to climb a social status that doesn't belong to them, and they won't feel welcomed there. And at that moment, they'll say "I don't care"... in those circles, there's little you can do... you're not formed there, you won't fit in no matter how much you have.
That generation won't feel right, and they'll waste to try to fit in... and there are sharks ready to fleece them of their few cents 🦈... and like I said, you haven't mentioned the lawyers who'll collect their cut from legal battles between heirs fighting for their share or disagreeing with their portion.
Want to make money? Set up an inheritance law firm and an accounting office... there's a lot of potential there.
And the "fullest" won't last long before they are in debt again.
This will happen with the rich families and some of the middle - especially since greed and drama is the normal behaviours of society now.
I think most of the wealth that will be passed on will be in the form of real estate. To unlock it you would have to sell real estate and a lot of sellers means lower prices... Once that is sold the money will be mostly wasted in my opinion. Good for real estate agents, but would not change much in terms of economic picture for the masses...
The Cycle Continues
The masses will remain poor, they'll just have a moment of temporary madness and then they'll be back on the ground where they've been... and of course, the controllers are just waiting for the opportunity to take away the wealth earned by their parents... it won't make much difference.
Agreed... Most people are not equipped to keep the wealth.
Buy the dip? There will end up being plenty more renters.
My parents spend everything on our upbringing so nothing inherited. But the value for money and a debt free life and few other important life lesson are the prized possession with us. I think a person should pass on some learning rather than making their coming generation useless by transferring enormous wealth for their extravagant life....but the boomers are well blessed to enjoy the life without seeing much struggle
The "long peace" where so many died after the war, then the boom of rebuilding and new business opportunity growth, definitely gave an advantage. Pity that rather than build a better system, they doubled-down on making the current one even more greed focused.
Well, it's mostly going to be spent as free money and I'm certain GenZs aren't that much interested in investing, except for maybe crypto which gets wiped out in an instant.
I read of a trader that blew an $11 million account in leveraged trading. That's one of the things most likely to happen to all that money once redistributed. The rest might be spent living stylishly and lavishly. Only very few will invest reasonably.
Simple: The money just goes back to the top 1% in due time.
Yep. On an even playing field, things will soon return to uneven.
It's a grim take, but history backs you up. Most family wealth is gone by the third generation anyway. If the current generations are already drowning in debt and lifestyle inflation, this inheritance won't be a reset button, it’ll just be a temporary band-aid
The Damn Third Generation
The damn third generation that only sees bonanza, and wants everything now... I almost see it... they want inheritance just to sell it and live life... and then they'll go to the 2nd gen to ask for help when they become a damn prodigal son who ends up with the pigs. That'll increase drugs and everything... narco will thrive due to that excess money.
If a generation is already struggling with mental health and debt, dropping a huge inheritance on them might actually accelerate some of those social issues rather than fixing their lives.
It happens over and over. Even in many wealthy families.
The first builds it, the second maintains it, and the third just views it as an ATM. When you haven't seen the work it took to accumulate the wealth, you don't really respect the effort required to keep it.
Where once women did not work or were not involved in outside activities, now that amount is increasing day by day and you can see that women are getting rich, especially in countries like ours. It is also true that the average life expectancy of women is higher than that of men. However, here when the husband dies, the property is mainly owned by the children and especially the men, namely the sons, and the daughter or wife is cheated. Anyway, I do not have much idea about boomers.
Perhaps you should change the culture of the country?
I don't think the change of ownership will be that significant because the receiving generation invests similarly to their parents. Perhaps the next change of ownership will be problematic, as the receiving generation may be more willing to take risks when investing.
Furthermore, more and more people are not leaving everything to the next generation, allocating a good portion of their money to enjoy before they die or leaving it for charitable causes (for example, Bill Gates).
The middle holds immense value and drives demand. They don't need to be billionaires who leave it to charity to make a difference. I think that people don't tend to invest similarly to their parents, unless their parents taught them young - most don't or haven't.
I have a feeling that most of the inheritance will be squandered by young grandchildren. Few will continue to invest in real estate and stocks. When people are young, they want to live lavishly and think they'll be a millionaire forever.
As said, the "capture" won't take long.
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STOPIt is the perfect reason to ramp up inflation ahead of the wealth transfer. Sovereign nations continue to print money, and those with the extra money buy hard assets like metals and real estate. The rest use the money to pay off debt and keep their heads above water as prices rise at pace with inflation. The top skims all the profits from the top and all the inheritance is gone in a generarion.
True, although some people can gain a lot, others might just end up supporting consumerism instead of making smart investments.