Think Tank Millennials and Gen Z to Wait Longer for 31 Trillion Great Wealth Transfer by 2033
A recent report has revealed that Generation X is on the brink of a historic transfer of wealth. According to the report by Altrata, individuals born between the mid-1960s and the early 1980s are expected to inherit approximately $31 trillion by 2033.
Altrata’s data indicates that 87% of the individuals transferring their wealth are classified as very high net worth (VHNW), with a net worth ranging from $5 million to $30 million. Interestingly, Gen X is set to be the first recipients of this massive wealth transfer, as opposed to Millennials and Generation Z, who will primarily inherit from their grandparents.
The report also highlights that over 70% of the ultra-wealthy individuals passing on their assets over the next decade will be corporate executives, while entrepreneurs will make up 20%, and 7% will be sole inheritors, meaning they are wealthy solely due to inheritance.
The shift towards wealth transfers occurring during the lifetime of the head of a family, rather than solely upon their death, is attributed to practical reasons such as tax planning and the desire to prepare heirs for future financial stewardship. This shift, coupled with rising global wealth and changing values among younger generations, underscores the importance of early succession planning for families and presents new opportunities for organizations that advise and engage with the wealthy.
Ernst & Young (EY), in its Global Wealth Management Industry Report, estimates that baby boomers will transfer up to $3 trillion in assets to their descendants this year. EY predicts that this “tidal wave” of wealth transfer will continue until the beginning of the next decade.
The report also projects that between 2024 and 2030, wealthy donors will pass down a staggering $18 trillion to beneficiaries, significantly impacting female and next-generation inheritors.
It is evident that this transfer of wealth will have a transformative effect on the global economy and presents both opportunities and challenges for families and advisors in the wealth management industry.
