Unless you are a financial professional, or have one in the family, you may not be aware that October is Financial Planning Month. A time set aside to review the year behind you and to prepare for the one ahead. After all, preparing is planning, and planning is preparing.
As we move through the second decade of the twenty-first century, one of the most important aspects of financial planning is preparing for the largest wealth transfer period in our country’s history.
Over the next several decades, up to $68 trillion dollars will be transferred from the baby boomer generation (1946-1964) to their adult children in Generation X (1965-1980) and the millennial generation (1981-1996). This phenomenon will not only have a tremendous impact on the country’s economy, it will also have one on the world economy.
The economy into which the baby boomers were born, was one of tremendous post-war prosperity and a robust labor market. They were able to graduate from college without much, if any debt. Even those who didn’t go to college could find jobs that supported purchasing a house and raising a family. Those homes continued to appreciate as did the stock market. By 2020, baby boomers held nearly 57% of all wealth and assets in the U.S. economy. Millennials held only 3% of the country’s wealth.
Those statistics clearly show how the “great wealth transfer” will impact future generations over the next ten to twenty years. They will go from holding 3% of the country’s wealth to over 60%. What does that mean for them…and for everyone else?
It means you need to prepare! If you are a boomer who is passing on your wealth, you surely want it to be distributed according to your wishes, and perhaps even protected for following generations.
If you’re in line to receive an inheritance, you want to be in a position to manage it properly. The old adage, “shirtsleeves to shirtsleeves in three generations” is often heard in financial circles because it is often true.
A recent study found that only 11% of millennials showed a "relatively high" level of financial literacy. It is easy to see how inheriting trillions of dollars could be problematic for the next generation if they have no clear plan as to how to keep and manage it.
Our One Financial Services team is here to help guide you in protecting your estate while helping to ensure your legacy lives on for generations to come.