As the $84 trillion Great Wealth Transfer approaches in the next decade, Generation X is poised to emerge as the primary beneficiaries. While millennials and Generation Z may be anticipating substantial inheritances from the wealthy baby boomers, it is actually Gen Xers who are projected to receive the largest windfalls in the near future. According to a recent study by Wealth-X, individuals in North America who are expected to inherit fortunes of $5 million or more have an average age of 46.1 years old, putting them firmly in the Generation X category. This group is defined as individuals between the ages of 44 and 59 today, highlighting the fact that they are on the cusp of benefiting from substantial inheritances.
Despite the common focus on millennials and Gen Z as the next generation of wealthy inheritors, the study sheds light on the significant wealth potential of Generation X that has often been overlooked. Wealth management firms and private banks have predominantly targeted younger clients in their 20s and 30s in anticipation of the impending wealth transfer. However, the report emphasizes that Generation X will be the first to inherit from their affluent parents, positioning them at the forefront of the wealth transfer process. With more than half of millennials expecting inheritances of at least $350,000, it is evident that the focus needs to shift towards Generation X, who are set to inherit larger sums from their parents.
The Concentration of Inheritances
In the next decade, a staggering 1.2 million individuals with a net worth of $5 million or more will collectively pass down over $31 trillion in wealth. The report highlights that the majority of this wealth transfer, amounting to 64%, will come from the ultra-wealthy individuals worth $30 million or more. This elite group of 155,000 individuals will be responsible for passing down nearly $20 trillion, signifying the concentrated nature of inheritances at the top. Moreover, the super-wealthy individuals with a net worth of $100 million or more will contribute significantly to the wealth transfer, accounting for almost half of the total amount. Billionaires are also expected to pass down approximately $5 trillion, reflecting the immense scale of wealth transfer that will take place in the coming years.
As inheritors from different generations receive their wealth, they are likely to have distinct values and priorities that will shape their financial decisions. Wealth managers, luxury companies, and philanthropies must adapt to these evolving needs in order to cater to the preferences of the new generation of wealthy clients. By acknowledging the prominence of Generation X in the wealth transfer process and understanding their unique financial goals, businesses can effectively tailor their services to meet the demands of this influential demographic. Embracing the changing landscape of inheritances and catering to the diverse needs of inheritors will be crucial for industries seeking to thrive in the era of the Great Wealth Transfer.
Generation X is positioned to play a pivotal role in the $84 trillion Great Wealth Transfer, receiving substantial inheritances from their affluent parents. As the focus shifts towards this overlooked demographic, businesses and industries must adapt to the changing values and priorities of inheritors in order to effectively leverage the opportunities presented by the upcoming wealth transfer. By recognizing the significance of Generation X in inheritances and tailoring their strategies accordingly, companies can navigate the evolving landscape of wealth management and establish lasting relationships with the inheritors of tomorrow.