Why millennials may inherit less than expected

The biggest economic revolution in history is about to happen - here's how you can be a part of it

At the peak of wealth transfer in history, parents are expected to give more than $68 trillion to their children.

“It’s the generation that has acquired more wealth than any other generation,” said Mark Mirsberger, certified public accountant and CEO of Dana Investment Advisors, referring to boomers.

But maybe they are not giving as much as their children think.

Research shows a growing disconnect between the number of millennials expecting to receive an inheritance in a “mass wealth transfer” and the number of seniors planning to leave it behind.

More from Personal Finance:
35% of millionaires say they won’t have enough to retire
Only 12% of adults, and 29% of millionaires, feel ‘rich’
Strategies for ‘remittance of wealth’

More than half, or 52%, of millennials who expect to receive an inheritance from their parents or another relative said they expect to receive at least $350,000, according to a recent survey of more than 2,000 adults by Alliant Credit Union. But 55% of newborns who want to leave an inheritance said they would give less than $250,000.

Also Read :  83% of Quebecers prefer to buy products from circular economy practices

One of the conflicts is “wanting to make sure people have enough money to live on before they start making gifts,” considering their lifestyle, long-term care and other issues, said Susan Hirshman, chief wealth officer at Schwab Wealth. Tips for Phoenix.

“There is so much that could have been,” he added.

Throw in rising prices, global uncertainty and fears of a recession, and players can suddenly become more financially secure – and less generous when it comes to giving away money.

What Millennials Want in a Financial Advisor

Less than a third, or 23%, of seniors said they are “very comfortable” with their finances right now, according to a special report by Edelman Financial Engines. Few – only 12% – consider themselves wealthy.

Also Read :  For retirement changes in Secure 2.0, December is do-or-die time

Another growing issue is financial independence, the Edelman report found: 85% of parents said they value autonomy, but 4 out of 10 are still helping their older children with money.

“As parents, we struggle with how to support our children,” said Jason Van de Loo, head of financial planning and marketing at Edelman Financial Engines.

At the same time, the perception of wealth is changing, Hirshman said. Parents may feel reluctant to pay more, he said. The idea is “I got this and you should too.”

As parents, we struggle with how best to support our children.

Jason Van de Loo

head of financial planning and marketing at Edelman Financial Engines

And while many parents plan to leave something to their children, only 37% said they currently have a plan to transfer their wealth, the Edelman report found.

It is a source of conflict in many families, according to Van de Loo. “It’s not just about how the money is distributed,” he said. “Struggles with those in charge are common.”

Also Read :  Editorial: Hawaii can do much for own economy

“You have to have an open and honest conversation,” Van de Loo advised.

How to have a scary money story

Many families are afraid to talk about money, especially financial plans, a recent Wells Fargo report found. About 26 percent of older children would rather deal with their parents’ finances after their death than talk about their living arrangements. Also, 19% said they don’t mind receiving anything as long as they don’t discuss it with their parents.

“It’s how you create a conversation,” Hirshman said. “It’s not about death but really about putting your family in the best emotional, financial and stable place they can be.”

Without explaining a clear plan and why, “you’re taking something tragic and making it tragic,” he said.

Subscribe to CNBC on YouTube.


Leave a Reply

Your email address will not be published.