Most inheritance dollars from baby boomers expected to go to households with above-median net worth, Visa study says
Analysis estimates $36 trillion will pass from baby boomers to Generation X and millennials over the next 20 years, with most expected to be saved or invested.
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Most of the trillions of dollars expected to be passed from baby boomers to younger generations over the next two decades will go to households that already have above-median net worth, limiting the boost to consumer spending from the so-called "great wealth transfer," according to a new analysis from Visa Business and Economic Insights.
The report estimates about $36 trillion will be transferred from baby boomers to Generation X and millennial households over the next 20 years. Visa said the estimate is far lower than widely cited projections exceeding $100 trillion because it accounts for retirement spending, debt, taxes, charitable giving and other factors that reduce the amount of wealth ultimately passed to heirs.
About three-quarters of households expected to receive inheritances already have above-median net worth, according to the analysis. As a result, Visa estimates roughly $28 trillion of inherited wealth will be saved or invested, while about $8 trillion will be spent on goods and services over the next 20 years.
The report said the additional spending is expected to have only a modest effect on overall consumer spending because many inheritance recipients already have above-median net worth. However, Visa said some industries could see a more noticeable benefit, including housing, automobiles, travel and retail.
Visa estimates baby boomers currently hold at least $93 trillion in assets. The report said parental assistance with home down payments and multigenerational travel are among the ways the wealth transfer is already shaping consumer behavior.
