Why millennials may inherit less than expected

Much of the wealth of translation history is about to happen - here's how to be a part of it

On the cusp of the most generational transfer of wealth in history, baby boomers are poised to pass on more than $68 million to their children.

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

But they may not be giving as much as their children think.

Research shows a growing disconnect between the number of millennials who expect to inherit the “greater wealth” and the majority of older people who plan to leave them behind.

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More than half, or 52%, of millennials who expect to receive an inheritance from their parents or another family member said they expect to receive at least $350,000, roughly and a recent survey of more than 2,000 Alliant Credit Union seniors. But 55% of baby boomers who plan to leave an inheritance said they will pass on less than $250,000.

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Part of the difference is “wanting to make sure people have enough money to live on before they start giving,” and taking into account their own lifestyle, long-term care and other considerations, said Susan Hirshman, director of wealth management at Schwab Wealth Advisors in Phoenix.

“There’s a lot to be done,” he added.

Throw in inflation, geopolitical uncertainty and fears of a recession, and consumers are suddenly feeling insecure about their financial situation – and less generous when it comes to giving money.

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Less than one-quarter, or 23%, of adults said they feel “very comfortable” about their finances now, according to another report by Edelman Financial Engines. Few – only 12% – think they are rich.

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

“As parents, we are struggling with how to raise our children,” said Jason Van de Loo, head of financial and marketing strategy at Edelman Financial Engines.

At the same time, views on the legacy economy are changing, Hirshman said. Parents may feel less willing to commit large sums of money, he said. The mindset is “I got this and you should too.”

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

Jason Van de Loo

head of economic and marketing strategy at Edelman Financial Engines

And although many parents plan to leave something for their children, only 37% said they currently have plans for transferring their wealth, the Edelman report found. .

It’s a source of conflict for many families, according to Van de Loo. “It’s not just a fight over the distribution of money,” he said. “The fights over who is appointed to be in charge are as usual”.

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

How the money talks

Many families are afraid to talk about money, especially financial planning, a recent Wells Fargo report found. About 26% of adults would rather handle their parents’ estate when they die than talk about it while they’re alive. Also, 19% said they wouldn’t mind getting something if they didn’t have that conversation with their parents.

“It’s how you frame the conversation,” Hirshman said. “It’s not about death, it’s really about putting your family in the best emotional, financial and organizational situation they can.”

Without explaining a clear plan and the reason behind it, “you’re taking something that’s frustrating and confusing,” he said.

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