17 Reasons Boomers Aren’t Passing Down Much Wealth To The Next Generation

Written By Jill Taylor

These days, the older generations aren’t passing down quite as much cash to the benefactors of their wills, and there are a number of social and economic factors that are causing this. Here are 17 key reasons why boomers, in particular, aren’t handing down as much wealth.

Increased Life Expectancy

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The Hamilton Project tells us that over the past 100 years, life expectancy in the U.S. has risen by a massive 25 years. As a result, boomers are living longer than previous generations, which means they require more funds for their retirement needs.

Debt Burdens

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Boomers often carry significant debt into retirement, including their mortgages and credit card debt. Debt, in general, is up substantially from previous generations, and sadly, this causes a burden for benefactors in the will. Debt doesn’t just go away when you die, as much as we wish it would.

Supporting Adult Children

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Many Boomers continue to financially support their adult offspring, as they have not been able to start businesses because of rising housing costs and other expenses. This strains the amount of wealth they can pass down, too.

Changing Family Dynamics

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The idea of ‘family’ has changed a lot over the past few decades. Boomers are marrying, divorcing, and remarrying a lot more than other generations have done, for starters. As a result, inheritance to individual children has become diluted in many ways.

Rising Healthcare Costs

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In 2022, spending on healthcare rose 4.1% to a whopping $4.4 trillion, or $13,493 per person, states the American Medical Association. This is a serious amount of cash that boomers won’t be able to pass on to future generations.

Priority on Enjoying Retirement

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These days, people just want to enjoy their retirement more, and we can’t really blame them! Boomers might want to go for that trip to Paris that they’ve always dreamed of or buy that fancy car. Their kids might not like the lack of inheritance, but sometimes, you just have to live your life.

Living Inheritances

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Boomers often prefer to give gifts to their family while they’re still alive rather than leaving a big bunch of cash. Not only does this make sense on a more personal level, but it can often relieve taxes as well. It’s a win-win situation!

Avoiding Family Conflicts

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Inheritance disputes are common, and boomers want to avoid them if possible. As a result, they might prefer to distribute their wealth in different ways, such as setting up trusts or even donating to charities. These are certainly a couple of ways to relieve conflict.

Economic Downturns

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The Center for Retirement Research claims that the Great Recession between 2007 and 2009 caused a serious shortfall in savings for boomers. This means that they haven’t been able to enjoy as much retirement wealth as older generations. Of course, this means less inheritance for their children, too.

Increased Living Costs

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The bottom line is that boomers don’t have as much money as they used to, as the cost of living is much higher than it has been in the past. The rising cost of living impacts Boomers’ ability to save, so they can’t leave behind as much money.

Inadequate Financial Planning

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It may sometimes be the fault of the boomers themselves that they don’t have as much wealth left at the end. Comprehensive financial planning is a skill, and not all boomers possess it. So, if they haven’t been able to plan for retirement, this will affect wealth transfer.

Increased Tax Burden

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Inheritance and estate taxes just seem to go up and up over time. And, of course, the more tax on the inheritance, the less wealth the boomers can pass down to the next generation. Tax planning is essential but often overlooked by boomers, leading to larger tax liabilities.

Real Estate Market Volatility

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Nowadays, no one really knows what they’ll be able to sell their homes for, as the International Monetary Fund says that interest rates have caused serious pressure on the real estate sector. As a result, it’s hard for boomers to say how much inheritance they have to give.

Long-Term Care Needs

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A significant portion of Boomers will require long-term care as they get older, and as we know, assisted living and nursing homes are very expensive indeed. In fact, they can cost hundreds of thousands of dollars per year! These long-term care costs deplete savings and reduce inheritances.

Financial Mismanagement

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Failing to prepare for taxes or retirement is one thing, but there are a few other ways in which financial mismanagement can cause boomers to end up with less wealth. These include falling victim to scams or just general overspending.

Economic Support for Aging Parents

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Another factor of the longer life expectancies of today is that many boomers are still supporting their aging parents financially long after their retirement. The more they spend on this, the less of their own wealth they’re going to be able to accrue and pass on.

Lack of Transparency in Wealth Planning

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A final note is that boomers often will not efficiently communicate their financial plans to the heirs of their inheritances. This lack of transparency can lead to surprises and unmet expectations, and the heirs might end up with less money than they expected as a result.

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