Baby boomers hold roughly $93 trillion in assets, but only $36 trillion could reach Gen X and millennial heirs over the next 20 years, according to new data.
The estimate, released last week by Visa Business and Economic Insights, is far below Cerulli Associates’ widely cited projection that as much as $124 trillion could change hands through 2048.
The gulf between the headline figures offers a sobering picture of the Great Wealth Transfer and exposes a basic problem with the way inheritance is often discussed: Assets held today are not the same as wealth available to heirs tomorrow. “For businesses in big-ticket sectors like housing and travel, this is not a future trend to watch,” says Wayne Best, chief economist at Visa. “It is already influencing consumer decisions—and shaping where growth will be distributed in the years ahead.”
How retirement can consume an inheritance
The heart of the issue is that the assets held by boomers still have a lot of work to do.
“A lot of people look at the great American Wealth Transfer as something that’s going to be smooth, but it shouldn’t be looked at as one giant check that gets passed down to the next generation,” says Evan Mills, associate financial adviser at Scholar Advising. “That wealth is going to have to go through different tollbooths on the way.”
The largest toll is retirement itself. Visa estimates boomers will draw down about $16 trillion over the next 20 years to cover housing, food, healthcare, prescription drugs, and other living expenses.
Those burdens will be especially acute for families with the fewest assets.
“Their position is different from previous generations because the retirement itself costs more, and more of that wealth gets eaten up before it ever reaches an heir,” Mills says.
Long-term care can accelerate that drawdown.
“Long-term care, healthcare, housing costs, and taxes on retirement account withdrawals can reduce an estate faster than families expect,” explains Zachary Sahar, CPA and managing director at Capital Tax.