America's 'Great Wealth Transfer' is underway. How will it impact the country?

What’s happening

As a generation, baby boomers, those born between 1946 and 1964, have done very well for themselves.

Blessed with the good fortune to have entered adulthood at the start of an era of exploding housing values and sustained stock market growth, the roughly 20% of Americans who fall into the boomer generation have amassed $80 trillion in cumulative wealth — nearly as much as all other living generations combined. With the oldest boomers now approaching 80, some of that wealth has started to be passed down to younger generations, marking the early stages of what’s become known as the “Great Wealth Transfer.”

In the coming decades, economists estimate that the children of boomers, most of them millennials born between 1981 and 1996, stand to inherit as much as $70 trillion to $90 trillion in real estate, stock, cash and other assets in the U.S. alone. It’ll be enough to make millennials “the richest generation in history,” according to one recent analysis.

Not everyone stands to benefit, of course. The wealthiest 10% of Americans hold the lion's share of the country’s assets, so their heirs are in position to take in the majority of the wealth that will be passed down. But that still leaves tens of trillions of dollars that will be transferred to the children of middle-class, and even some lower-class, boomers.

The amount of wealth that’s set to change hands is so massive — two or three times America’s annual gross domestic product — that experts say it will have an impact not just on the economy, but also on our culture and politics.

Why there’s debate

Some experts view the Great Wealth Transfer as millennials’ best hope for making up the economic ground they’ve lost after enduring two recessions, the coronavirus pandemic and recent cost increases that have made things like homeownership increasingly out of reach. With their increased wealth, millennials — along with some Gen X-ers (born 1965 to 1980) and Gen Z-ers (born 1997 to 2012) — will have the buying power to shape the country to fit their tastes and political worldview.

But others fear that the Great Wealth Transfer will only serve to further entrench inequality by ensuring that only the children of the well-off benefit from the gains made by older generations. Many in that camp argue for stronger inheritance taxes to help distribute boomers’ wealth more equitably throughout the country.

There are others who question how much wealth really will get passed down, with some experts calling the Great Wealth Transfer a “myth.” These doubts come from the belief that most boomers will end up burning through the bulk of their wealth before they die, particularly on things like health care and elder care.

Perspectives

The Great Wealth Transfer will help millennials recover from the bad breaks they’ve been dealt

“This will be a substantial change in fortune for Millennials who have had to deal with recessions, exorbitant college tuition, nearly unaffordable home prices and trying to maintain a lifestyle that can’t compare to their parents.” — Jack Kelly, Forbes

The Great Wealth Transfer may not end up being so great after all

“Even with insurance, Americans struggle to pay for expenses like premiums, copayments, coinsurance, and uncovered health services. As a result, the significant wealth transfer from baby boomers to younger generations that researchers have predicted may not be so great after all, as much of older Americans' money goes toward health care.” — Medora Lee, USA Today

All that inherited wealth will entrench inequality for another generation

“Some families that are very well off will have money to leave for their kids; some who aren't well off won't even have money to take care of themselves and their own retirement and might be asking their kids to pay for them, for their housing and health care. So it's going to be an additional drain on today's millennial generation.” — Jason Fichtner, chief economist at the Bipartisan Policy Center, to Newsweek

Most of the riches will end up with people who don’t really need them

“There is a lot more wealth out there, and there are a lot of people in the age groups likely to die soon. … [But it's] getting inherited by people who don't need it very much.” — Isabel Sawhill, senior fellow at the Brookings Institution, to Business Insider

Even smaller inheritances could be life-altering for those in the middle and lower classes

“While much (much!) more money flows among the rich, for middle- and low-income people who receive gifts or inheritance, they represent a larger percentage of wealth. So large, in fact, that for some people, a gift from mom or dad is the thing that will keep them middle class.” — Meredith Haggerty, Vox

We need new laws to ensure that boomers’ wealth serves the country as a whole

“The vast 1940-to-1960 expansion of America’s middle class, we need to keep in mind, didn’t just happen. Advocates for greater equality made it happen. … We need to do more than create a much more equitable distribution of income and wealth. We need to create a much more equitable distribution of income and wealth that can last.” — Sam Pizzigati, Common Dreams

The wealth transfer could put a big dent in gender inequality

“Wealth is going to trickle down to a very different generation of women. For example, women of younger generations tend to have attained a higher level of education, they marry later in life, and are thought to be more financially literate. That transfer is expected to narrow the gender wealth gap.” — Aruni Soni, Business Insider

Younger generations will have a greater ability to shape the world around them

“The transfer of wealth is going to give [Gen Z and millennials] enormous financial power. They will have influence as never before, on their peers as well as the ability to influence corporations, societies and governments. And they have an agenda.” — Ken Costa, author of The 100 Trillion Dollar Wealth Transfer, to Financial Times

Most millennials won’t receive inheritance when they need it most

“Given the increasing life expectancy of the richest Americans, the big money isn’t likely to change hands until millennials are close to retirement themselves.” — Sarah Green Carmichael, Bloomberg