Today, we’re diving into a topic that has been making headlines for years: “The Myth of the
Great Boomer Wealth Transfer.” It’s a notion that has captured the imagination of many, but
is it really as substantial as it seems? Let’s explore this intriguing topic.
The Boomer Wealth Transfer Hype
For some time now, there has been a pervasive belief that the baby boomer generation,
born between 1946 and 1964, is set to transfer an unprecedented amount of wealth to
younger generations. The logic goes that as boomers age and eventually pass away, they
will be passing down their accumulated assets to their children and grandchildren, creating a
massive intergenerational wealth transfer.
The Reality Check
While it’s true that baby boomers collectively hold a significant amount of wealth, the idea of
a “Great Boomer Wealth Transfer” has been somewhat oversimplified and inflated. Here are
some key reasons why the reality may be different:
1. Inequality Among Boomers: Not all baby boomers are equally wealthy. There is a wide
disparity in wealth among this generation. A small percentage of boomers have amassed
substantial assets, while a significant portion of the generation has limited wealth. This
means that the wealth transfer will be unevenly distributed.
2. Increased Longevity: Thanks to improvements in healthcare and quality of life, boomers
are living longer than previous generations. This has implications for when and how wealth
will be transferred. Many will require their assets to cover their expenses in their later years.
3. Rising Healthcare Costs: The cost of healthcare in the United States, and in many other
countries, has been steadily increasing. As boomers age, a significant portion of their wealth
may be spent on medical care, leaving less for inheritance.
4. Charitable Giving: A substantial number of boomers are committed to philanthropy.
Rather than passing all their wealth to heirs, they may choose to donate a significant portion
to charitable causes.
5. Economic and Market Fluctuations: Economic conditions and financial markets are
subject to fluctuations and uncertainties. The value of assets held by boomers can fluctuate,
impacting the amount that can be passed down.
6. Changing Family Dynamics: Family structures have evolved over the years. Not all
boomers have children, and some may choose to leave their wealth to non-traditional
beneficiaries, like friends, charitable organizations, or even pets.
7. Debt and Expenses: Some boomers may carry substantial debt or have significant
financial responsibilities, such as caregiving for aging parents or supporting adult children.
This can reduce the amount available for inheritance.
What to Expect
For decades, researchers have hyped up the idea of the Great Wealth Transfer, painting a
picture of financial windfalls that would solve all our economic woes. But the truth is, unless
you’re already part of a wealthy family, the chances of striking it rich are slim.
Why does this myth persist? It conveniently fuels opposition against estate taxation, a
powerful tool in reducing income inequality. No one wants their potential inheritance taxed
away, especially when current exemptions are so generous. In fact, estates worth less than
$12.9 million are completely tax-free. Shockingly, only a minuscule 0.17% of estates were
taxed in the entire year of 2021, with a mere 6,000 estate-tax filings received by the IRS.
Instead of dreaming of trust-fund fortunes, let’s focus on the reality. Thousands of
hardworking individuals could benefit significantly from just a few thousand dollars to
alleviate credit card debt, afford a down payment on a home, or bolster their retirement
savings. However, the truth remains: the vast wealth accumulated by the baby boomer
generation won’t magically solve our financial problems as a nation. The death of the
wealthy won’t miraculously change wealth inequality or trigger an economic boom. Some
have money, but everyone will eventually pass away. Unfortunately, this doesn’t translate
into meaningful change for most of us.
Rees Bridges brings a unique value to the IFW as both a highly accomplished creative professional and a successful financial services executive to serve in his role as Senior VP, Marketing & Communications.
Over the last decade Rees has served as the lead marketing & communications professional for a Fortune 500 Financial Services firm. He oversaw all advisor marketing strategies, client communications, and the entire firms branding and marketing initiatives.
Rees continues to pursue his passions as a creative professional & musician for over 30 years, with an impressive profile and reputation as a designer, performer, teacher, and studio musician. Here is a little secret: He serves in the role as an international clinician for Mapex drums, Paiste Cymbals and held the record for world’s fastest drummer between 2006 and 2007.
Rees grew up in London, England and currently resides in Miami, Florida. When not at work, he enjoys spending time with family and friends, traveling, and indulging in his passions for music and creative pursuits.
