The greatest transfer of wealth in modern history has begun.
Baby boomers and older Americans have spent decades hoarding huge amounts of money. At the end of the first quarter of this year, Americans aged 70 and over had a net worth of nearly $ 35 trillion, according to data from the Federal Reserve. This represents 27% of all the wealth of the United States, up from 20% thirty years ago. Their wealth is equal to 157% of the gross domestic product of the United States, more than double the proportion of 30 years ago, according to federal data.
Now, they have started sharing it among their heirs and others, sparking a torrent of economic activity including buying homes, starting businesses, and donating to charity. And many recipients are guided by priorities and policies that differ from those of their donors.
Older generations will donate some $ 70 trillion between 2018 and 2042, according to research and consulting firm Cerulli Associates. About $ 61 trillion will go to heirs – increasingly Millennials and Gen Xers – with the balance going to philanthropy. The transfer will provide another demonstration of the inordinate economic power of the Baby Boomers, who came of age during a wave of post-World War II prosperity and drove the economy through many stages of their lives.
The average inheritance in 2019 was $ 212,854, up 45% from $ 146,844 adjusted for inflation in 1998, according to an analysis of Fed data by economists of a unit of capital One Financial Corp.