The Great Wealth Transfer: Empowering the Next Generation
We’re seeing a major shift in wealth distribution across generations. This is becoming known as the Great Wealth Transfer.
In the past, wealth passed between generations slowly, often involving smaller inheritances or family savings. Today, we are seeing a much more drastic change. Bankrate notes:
“The biggest wave of wealth in history is about to pass from Baby Boomers over the next 20 years. Called The Great Wealth Transfer, $84 trillion is poised to move from older Americans to Gen X and millennials. If managed wisely, this wealth can grow and ensure financial security.”
As Baby Boomers retire, sell businesses, or downsize their homes, they’re passing substantial assets to younger generations. This shift is creating a ripple effect that will continue for decades. The graph below, using data from Merrill and Cerulli Associates, shows just how much wealth will change hands by 2045:
Impact on the Housing Market
This wealth transfer is already affecting the housing market. Recently, home affordability has been a major concern, especially in more popular, high-demand areas. However, increased generational wealth is helping to ease these challenges. It is giving future homeowners more financial resources. Subsequently, as wealth passes down, more buyers can afford homes. Merrill highlights this benefit in a recent article:
“While millennials face steep barriers . . . to buying a first home in many markets, ‘that’s a for-now story, not a forever story’ . . .The Great Wealth Transfer should enable more of them to become homeowners — or trade up or add a second home — either through inherited property or the funds for a down payment.”
Impact on the Economy
Additionally, the Great Wealth Transfer is fueling entrepreneurial growth. Those looking to start a business can use inherited funds as capital to launch new ventures. This transfer supports the next generation of innovators and business owners, helping them bring their ideas to life.
Bottom Line
Ultimately, today’s housing market may present affordability challenges, but the Great Wealth Transfer is unlocking new opportunities. As wealth moves down and gets put to use, it’s breaking down barriers to homeownership and fueling entrepreneurial endeavors. If you are considering homeownership in your future, let’s connect.