You have probably heard the big number. Baby boomers are sitting on $93 trillion in wealth, and a lot of that is eventually headed to the next generation. The headlines make it sound like a windfall for everyone.
The reality, according to a new report from Visa Business and Economic Insights, is quite a bit more complicated.
The Lottery Analogy
Visa compared the Great Wealth Transfer to winning the lottery. You see the giant jackpot on the billboard. But then you take the lump sum, and right away you lose half. Then taxes and fees take another 30 to 40 percent. The check you actually cash looks nothing like the number you saw advertised.
The same thing happens with boomer wealth once you run the real math.
How $93 Trillion Becomes $36 Trillion
Start with that $93 trillion figure. First, strip out the wealth held by the top 1 percent of households. Then subtract all the debt boomers carry: mortgages, credit cards, auto loans, and more. After that, deduct what boomers will spend during retirement on housing, food, healthcare, and prescription drugs. Add taxes and fees on top.
What remains as actual inheritance? Visa calculated $36 trillion. That works out to roughly $515,000 per inheriting household on average.
But that average overstates what most families will see. Nearly 75 percent of inherited money from the wealth transfer goes to households already in the top 2 to 10 percent. The bottom 50 percent of recipients get only a minuscule share.
Boomers Carry More Debt Than You Might Expect
One reason the number shrinks so much is debt. Despite being the wealthiest generation, many boomers are still paying off significant obligations. According to Visa, 41 percent of homeowners between ages 65 and 79 still carry mortgage debt. Among those 80 and older, 31 percent do too.
On top of mortgages, boomers also carry credit card balances, auto loans, personal and business loans, as well as borrow against investment accounts. The report notes that many boomers have far less financial flexibility, and far less to pass on, than the headline figures suggest.
The Money Is Already Starting to Flow
Many boomers are not waiting until death to share what they have built. Visa calls it giving while living.
About a quarter of millennial homeowners got help with a down payment from their parents. Without that support, they would not have been able to buy their current home. That help made it possible to qualify for a mortgage, lower monthly payments, or afford a more expensive property.
Grandparents are also spending directly on grandchildren. Skip-generation trips, where grandparents travel with grandkids, without mom and dad along, have become increasingly popular. Twenty-eight percent of grandparents have already taken one of these trips, and 35 percent plan to in the next three years.
What This Means for You
Of the $36 trillion that does get transferred, Visa estimates that $28 trillion will likely be saved or invested rather than spent. Only about $8 trillion is expected to go toward actual purchases.
So if your kids or grandkids have been counting on a big inheritance check, the honest conversation may be worth having now. The wealth our generation built is real. But by the time it moves through debt, retirement costs, and taxes, the number that actually lands in the next generation’s hands is much more modest than the headlines imply.
The good news is that for many boomer families, the transfer is already happening: one down payment, one family trip, one act of generosity at a time.
