What You Need to Know
• The “great wealth transfer” will primarily benefit affluent younger Americans, according to Visa Business and Economic Insights.
• Baby boomers hold $93 trillion in assets, but only $36 trillion will be inheritable after deductions.
• Visa estimates that $8 trillion of the transferred wealth will be spent, boosting consumer spending growth by 0.1 percentage points.
Visa Business and Economic Insights reported that the “great wealth transfer,” the transfer of assets from the baby boomer generation, will mainly benefit younger affluent Americans. The report indicates that while baby boomers possess $93 trillion in assets, the inheritable amount will decrease to $36 trillion after accounting for liabilities, retirement spending, charitable contributions, and taxes. Excluding the wealth of the top 1% of U.S. households, inheriting households can expect an average of $515,000. Of the $36 trillion expected to be transferred, only $8 trillion is anticipated to be spent, as most recipients are already wealthy and likely to save or invest their inheritances. This spending is projected to increase average annual consumer spending growth by about 0.1 percentage points over the next 20 years, benefiting sectors like home improvement and travel.
Why It Matters
The “great wealth transfer” is significant as it highlights the economic dynamics between generations, particularly the financial legacy of baby boomers. With $93 trillion in assets, the baby boomer generation is poised to impact consumer spending patterns significantly. The report’s exclusion of the wealthiest households emphasizes the focus on average Americans, illustrating how wealth distribution may affect various sectors. Understanding these dynamics is crucial for businesses and policymakers as they prepare for shifts in consumer behavior driven by this wealth transfer.
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