Over the next three decades, the world will witness potentially the largest wealth transfer in history as Baby Boomers pass on their massive asset stockpiles to their children and other heirs. While millennials are sometimes stereotyped as financially irresponsible, a new survey conducted by deVere Group suggests Baby Boomers intend to put that wealth to work for them.
Nigel Green, deVere Group CEO, said Monday the numbers associated with the so-called Great Wealth Transfer are “staggering.”
“According to some estimates, $68 trillion in wealth is to be passed down from the baby boomers – the wealthiest generation ever - to their children and other heirs over the next 30 years,” Green said.
Financially Responsible Millennials: A new survey of deVere Group’s global millennial clients reveals 71% of them intend to invest their inheritance to boost their investment income in retirement. Green said the survey results bust the myth that millennials are financially irresponsible.
“Millennials are often falsely stereotyped for their sense of entitlement and thought to be more financially reckless than other generations,” Green said.
He said many millennials are simply struggling to reproduce their parents’ wealth growth due to difficult environmental factors, such as slower wage growth, higher cost of living and a more sluggish global economy.
The massive Baby Boomer wealth transfer could be a lifeline for many millennials, according to Green. However, he urged young people not to rely on inheritance as the centerpiece of their long-term financial plan. It can be extremely difficult to predict the timing of an inheritance, and many Boomers may experience extremely high costs associated with their elderly years that can significantly impact their savings.
Benzinga’s Take: While it’s encouraging to see that younger deVere clients are looking to invest their inheritance, a survey of young people who are already customers of a financial consultancy is likely not a representative sample of average millennials. It’s also likely that due to the extreme wealth gap within the Baby Boomer generation, a very high percentage of that $68 trillion will be passed down to a very small percentage of wealthy millennials.
One of the first places millennials should look to invest inherited money for retirement is a diversified, low-cost mutual or index fund, such as the SPDR S&P 500 ETF Trust (NYSE: SPY).
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