Sunday, April 4, 2021
A large amount of cash is expected to move from the pockets of boomers to everyone younger, though guesses at just how much and when vary: Forbes reports $30 trillion over “many years,” PNC says $59 trillion by 2061, CNBC mentions $68 trillion and 25 years, and the New York Times confirms the variety of these assessments but puts it at around $15 trillion over the next decade.
[A] big, generational transfer is on the horizon, and while part of it is precipitated by possible changes to the generous inheritance laws the Trump administration put in place, as the baby boomers tick up in age, part of it is just the cycle of life.
In “Not All Millennials,” published in the Drift, Kiara Barrows noted that “the distribution of this inheritance will fall along the lines of existing inequalities, deepening the fractures in any millennial program of economic solidarity.” And that’s certainly true — the nation’s top 1 percent have received more than 35 percent of the inherited wealth, according to Edward Wolff, a professor at New York University and the author of Inherited Wealth in America: Future Boom or Bust?
But Wolff also says, surprisingly, that inherited wealth isn’t a huge driver of inequality in America — it actually has had an equalizing effect. And there’s no indication that the next decades will be any different.
The reason is deceptively simple: While much (much!) more money flows among the rich, for middle- and low-income people who receive gifts or inheritance, they represent a larger percentage of wealth. So large, in fact, that for some people, a gift from mom or dad is the thing that will keep them middle class.
But recipients-wise, we’re not talking about a lot of people. Twenty-two percent of American households receive a wealth transfer, Wolff says in a phone interview — a significant figure but certainly not a majority.
Read more here.