Why millennials may inherit less than expected

The greatest transfer of wealth in history is about to happen - here's how to be a part of it

On the brink of the largest generational wealth transfer in history, baby boomers are expected to pass on more than $68 trillion to their children.

“This is the generation that has amassed a greater percentage of wealth than any other generation,” said Mark Mearsberger, a certified public accountant and CEO of Dana Investment Advisors, referring to boomers.

But they may not pay as much as their children think.

Research shows a growing gap between millennials expecting to inherit a “great wealth transfer” and how many aging boomers want to leave them.

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Strategies for Navigating the “Great Wealth Transfer”

More than half, or 52%, of millennials who expect to receive an inheritance from a parent or other family member said they would receive at least $350,000, according to a recent Alliant Credit Union survey. But 55% of baby boomers looking to leave their inheritance said they would give less than $250,000.

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Susan Hirschman, director of wealth management at Schwab Wealth, said part of the conflict is “wanting to make sure people have enough money before they start giving” to take into account their life expectancy, long-term care and other considerations. Counseling in Phoenix.

“There are a lot of ifs,” he said.

Struggle with inflation, geopolitical uncertainty and fears of a recession, and boomers may suddenly feel less secure about their finances — and less generous when it comes to giving money.

What Millennials Want in a Financial Advisor

Less than a quarter of adults, or 23% of adults, said they currently feel “very comfortable” about their finances, according to a separate report by Edelman Financial Engines. Fewer – only 12% – consider themselves rich.

Another growing concern is financial independence, the Edelman report found: 85% of parents said they value independence, but 4 in 10 still support their adult children financially.

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

At the same time, the point of view about inherited wealth is changing, noted Hirschman. Parents may feel less inclined to transfer large sums of money, he said. The mindset is “I did it and you should too.”

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

Jason Van de Loo

head of wealth planning and marketing at Edelman Financial Engines

And while most parents plan to leave at least something to their children, only 37% said they currently plan to pass on their wealth, Edelman reports.

According to Van de Loo, this is a source of conflict for many families. “It’s not just about how the money is distributed,” he said. “Quarrels about who’s in charge are just as common.”

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

How to talk about scary money

A recent Wells Fargo report found that many families are afraid to talk about money, especially financial plans. About 26% of adult children deal with their parents’ estate after their death instead of talking about it while they are alive. Additionally, 19% said they wouldn’t mind getting something as long as they didn’t have to talk to their parents about it.

“It’s how you frame the conversation,” Hirschman said. “It’s not about death, it’s really about getting your family in the best emotional, financial and structural shape they can be.”

“You’re taking something sad and making it tragic,” he said, without explaining the exact plan and the reasoning behind it.

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