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The “Boomer Wealth Transfer” is a term used to describe the massive amount of wealth that baby boomers are holding at the moment, ready to pass on to the next generation. This all sounds great when you consider the wealth created by skyrocketing home prices and a booming stock market.

As always though, the devil is in the details. In my practice, family legacy is always a focus of our planning process. You would assume that with all the wealth in our community, these would be quick and easy conversations, but that’s not always the case.

Collectively, baby boomers have greatly benefited from America’s economic growth in the latter half of the 20th century. During their childhoods, the U.S. economy flourished as the country emerged as a global superpower. As adults, they had easier access to affordable housing compared to their children and grandchildren. Those who purchased homes saw significant gains as property values increased. Additionally, boomers have had the longest period to benefit from the U.S. stock market, which has surged approximately 4,000% since 1969. While it’s projected that over $84 trillion will be transferred by 2045, several factors could diminish the impact of this inheritance on younger generations.

  • Myth vs Reality

A large portion of this wealth transfer will benefit already-wealthy families. A Cerulli Associates report indicates that around 68% of the transferred wealth will come from households with at least $1 million in investable assets​. This concentration means that wealthier families will see the most significant benefits. Baby boomers will indeed leave substantial inheritances to their heirs, but it’s uncertain how transformative this will be. Millennials in affluent families likely don’t face significant college debt, have already received parental assistance for home purchases, and may even have grandparents contributing to childcare or tuition expenses. For these individuals, the wealth transfer has effectively been occurring over time and continues to do so.

  • Longevity Risk

While boomers are living longer, the high costs for healthcare associated with longevity are likely to consume a substantial portion of their savings. This financial burden could significantly reduce the amount of wealth available to be passed down. Tens of millions of retirees get their health insurance through Medicare, which doesn’t cover long-term care expenses. It also doesn’t cover services like dental or vision care. With healthcare costs expected to rise, many boomers might deplete their assets to cover these expenses, leaving less for their heirs​.

  • Retirement May Cost More Than You Think

Even boomers who have diligently saved for decades may find retirement more costly than anticipated. According to a recent Transamerica survey, most Americans retire five years earlier than planned due to factors such as layoffs, health issues, or the need to care for an ill partner or elderly parent. This results in less time to earn and more years of expenses to cover.

  • Millennial Financial Instability

Even for those millennials lucky enough to come from wealthy families, the economic landscape has been challenging for younger generations with substantial student debt, and high living costs. Their inheritance might not be sufficient to offset these financial challenges, especially if it’s already been eroded by healthcare expenses and other end-of-life costs​ incurred by their parents or grandparents.

I know this all sounds bleak but there are financial strategies available that can protect and grow your nest egg while in retirement as well as help cover the cost of long term care. Find a financial advisor you trust and start the conversation. The sooner the better.


For help with financial planning and estate planning Santa Barbara, contact us. You can reach Tremblay Financial Services, financial advisors in Santa Barbara, by calling 805.569.1982.