Everyone loves a windfall payout, and younger generations are due for a historic one.

In the coming decades, the Silent Generation and aging Baby Boomers are projected to hand down massive amounts of wealth to younger generations — potentially as high as $84 trillion in total assets, according to one study from Cerulli. 

The Great Wealth Transfer, as economists have dubbed it, is already underway.

This is potentially great news for Gen Xers, the perpetually high-strung millennials, and the Zoomers just entering adulthood. What better way to pay off student loans and finally crack the housing market than trillions of dollars in wealth transfers? 

If millennials mark the first generation to, according to some studies, be financially worse off than their parents, then the Great Wealth Transfer may tip the scales back in their favor. But experts warn that younger generations shouldn’t get their hopes up.

In fact, some say the Great Wealth Transfer will be just the opposite of a great generational equalizer, and is in fact likely to perpetuate existing trends in wealth inequality.

Transfer Market: It’s not your imagination, millennials: Boomers hold a lot of wealth. According to an analysis of Federal Reserve data by Visual Capitalist, the generation born between 1946 and 1964 collectively held around $76 trillion in 2023, or around 52% of the total wealth in America, despite representing just 20% of the country’s population. Their immediate elders, the Silent Generation, controlled around $19.7 trillion, behind Gen X ($37.8 trillion) but ahead of millennials ($13.5 trillion), who make up around 22% of the total population. Zoomers didn’t even track in the study.

In other words, morbid as it may be, there’s a lot of wealth — in cash, in real estate, in equities, and in other assets — at the top that will soon no longer have the same owner. Its transfer will likely be the largest in history.

One interesting wrinkle: While Boomers had more widespread access to defined benefit pension plans, many in the cohort still missed the boat, relying on 401(k)s instead. Unlike pensions, 401(k)s can be passed down to the next generation after the deaths of their original owners.

Great Expectations: But not every millennial is set to benefit.

Only a minority of American households receive inheritances — about 20%, according to the Federal Reserve’s 2022 Survey of Consumer Finances. And while that figure might tick up some as baby boomers take their final bow, inheritances will likely come later and at smaller amounts than those anticipating them expect:

  • According to a recent study by Alliant Credit Union, of millennials who are expecting an inheritance, just over half say they are anticipating receiving more than $350,000. 
  • But of boomers who plan on leaving an inheritance, 55% say they will be leaving less than $250,000. It may be time for wealthy households to have an uncomfortable chat about money.

“Parents have less money than their kids think,” Sumeet Grover, Alliant’s chief digital and marketing officer, told The New York Times.

Still, some older generations are finding different ways to give while they’re still hanging around our shared terrestrial plane, such as continuing to take their aging families on vacation (if it’s an inheritance you’re after, skip the trip to Ireland your dad is planning). Estimates vary, but as much as $13 trillion of silent generation and boomer wealth is expected to go to charity.

And of course, Alliant’s survey was only among those who plan on leaving or receiving any inheritance at all — a minority of the population. Most boomers will have very little to spare by the end of their lives, thanks to lack of savings, involuntarily retiring earlier than planned, and high healthcare costs.

In fact, a separate, mirror-image great wealth transfer is underway, too: According to a recent survey by the AARP, 32% of “midlife” Americans (adults ages 40 to 64) are providing financial support to their aging parents, while 42% say they expect to do so in the future. Meanwhile, 51% of midlife adults with children at least 25 years old or older have provided their kids with some form of financial assistance in the past year. It’s why some have dubbed midlife adults “the sandwich generation.”

Younger generations expecting to inherit their parents’ homes may face another reality check. Many boomers are still paying off their mortgages; in 2022, the percentage of Americans older than 75 still holding mortgage debt hit a historic high of 25%, according to the Survey of Consumer Finances. That was up from 5% in 1995. Meanwhile, the median amount still owed on a mortgage has increased from $14,000 in 1995 to $102,000 in 2022. It’s in part due to a massive spike in cash-out refinances, home equity lines of credit, and second mortgages. According to a Bloomberg analysis of Freddie Mac, that total value has spiked from around $3.2 billion at the end of 2019 to $20 billion at the end of 2021.

Mind the Gap: So yes, the rich are getting richer. According to Cerulli, nearly $36 trillion worth of the wealth expected to be passed down in the coming decades, or about 42% of the total amount, is expected to come from high-net-worth and ultra-high-net-worth households, or just 1.5% of all households. The rest will mostly occur within the top 10% of US households, which hold roughly 70% of wealth in America when subtracting Social Security, according to a recent analysis by the Congressional Budget Office.

“The idea that we’re suddenly going to see an explosion of more wealth going to lower-wealth families, you know, outside the top 10%, is probably not supported by [the] data,” John Sabelhaus, a visiting fellow at the Urban-Brookings Tax Policy Center and adjunct research professor at the University of Michigan, told The Daily Upside.

In a recent research paper titled “Lifetime Wealth Transfers and Wealth Accumulation Dynamics,” Sabelhaus found that US households in the top 10% of wealth headed by “midlife” adults (ages 45 to 64) received 52% all wealth transfers between 2013 and 2022, and are expected to receive 44% of wealth transfers in the future.

Still, Sabelhaus says the Great Wealth Transfer is likely to merely perpetuate wealth inequality in America rather than exacerbate it — mostly because there isn’t much room left for even more wealth concentration at the top.

That means the wealthiest among us face the Dom Pérignon problems of navigating estate taxes, inheritance taxes, and family business succession plans. In the next installment of our Great Wealth Transfer series, we’ll examine the biggest obstacles for the ultra-rich.