The Great Wealth Transfer: A New Era of Opportunity — NIC, THE REALTOR

Recently, there’s been a noticeable change in how wealth is passed down through generations. This phenomenon is referred to as the Great Wealth Transfer.

Historically, passing down wealth from one generation to the next was a slow process, usually involving smaller inheritances or family savings. Nowadays, that dynamic has shifted significantly, with much larger sums being transferred. A recent article from Bankrate highlights this change.

“The biggest wave of wealth in history is about to pass from Baby Boomers over the next 20 years, and it’s going to have major impacts on many facets of life. Called The Great Wealth Transfer, $84 trillion is poised to move from older Americans to Gen X and millennials. If it’s managed smartly, Americans will be able to grow their wealth and ensure their financial security.”
— Bankrate

As more Baby Boomers reach retirement age, sell their businesses, or decide to downsize their homes, a significant amount of assets is being transferred to younger generations. This trend is expected to create a substantial ripple effect over the coming decades. The graph below, which includes data from Merrill and Cerulli Associates, illustrates the projected amount of inherited wealth that will be passed down through 2045.

Impact on the Housing Market

One of the most noticeable impacts of the ongoing wealth transfer is on the housing market. Home affordability has been a significant worry for many hopeful buyers, particularly in highly sought-after areas. The rise in generational wealth is likely to help alleviate some of these issues by giving future homeowners more financial resources. As assets are handed down through generations, buyers could find themselves in a stronger position to purchase homes. Merrill discusses this advantage in a recent article.

“While millennials face steep barriers . . . to buying a first home in many markets, ‘that’s a for-now story, not a forever story’ . . . The Great Wealth Transfer should enable more of them to become homeowners — or trade up or add a second home — either through inherited property or the funds for a down payment.”
— Merrill

Impact on the Economy

The Great Wealth Transfer affects more than just housing; it also opens up exciting opportunities for entrepreneurs to drive economic growth. For those looking to start a business, these funds can serve as essential capital to launch new ventures. This shift supports the next generation of innovators and business owners in turning their ideas into reality.

Bottom Line

Affordability is still a challenge in the current housing market, but the Great Wealth Transfer is set to create new opportunities. As wealth gets passed down and utilized, it should help lower some of the obstacles to homeownership and encourage various entrepreneurial efforts.



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