Why millennials may inherit less than expected

The biggest wealth transfer in history is about to happen - here's how to be a part of it

At the peak of the greatest wealth transfer in history, stepchildren are expected to pass on more than $68 billion to their children.

“We are a generation that has accumulated a greater percentage of wealth than any other generation that has ever existed,” said Mark Mirsberger, a certified public accountant and CEO of Dana Investment Advisors, referring to boomers.

But they may not be giving as much as their children think.

The study shows a growing disconnect between the billionaires who expect to inherit the “great wealth transfer” and how much the elderly plan to leave behind.

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More than half, or 52%, of millennials who expect to receive an inheritance from their parents or another family member say they expect to receive at least $350,000, according to a recent survey of more than 2,000 adults by Alliant Credit Union. But 55% of young children who plan to leave behind an inheritance say they will pass on less than $250,000.

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Part of the disagreement is “wanting to make sure people have enough money to live on before they start giving,” taking into account their life expectancy, long-term care and other considerations, said Susan Hirshman, director of wealth management at Schwab Wealth. Counseling in Phoenix.

“There are many possibilities,” he added.

Faced with rising prices, political uncertainty and fears of a recession, boomers may suddenly feel insecure about their financial standing – and less generous when it comes to giving money.

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Less than one-quarter, or 23%, of adults say they feel “very comfortable” about their finances now, according to a separate report by Edelman Financial Engines. Fewer – just 12% – consider themselves rich.

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Another growing issue is financial independence, the Edelman report found: 85% of parents say they value independence, but 4 in 10 still support their older children financially.

“As parents, we struggle with how to support our children,” said Jason Van de Loo, head of wealth planning and marketing at Edelman Financial Engines.

At the same time, perceptions of inherited wealth are changing, Hirshman said. Parents may feel less inclined to transfer large sums of money, he said. The mind says “I got this and you should too.”

As parents, we struggle with how to support our children.

Jason Van de Loo

head of wealth planning and marketing at Edelman Financial Engines

And while most parents plan to leave something to their children, only 37% said they currently have a plan in place to pass on their wealth, the Edelman report found.

It’s a source of conflict for many families, according to Van de Loo. “It’s not just a fight over the distribution of money,” he said. “Controversies about who is put under control are common.”

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“You have to have an open and honest conversation,” advised Van de Loo.

How to talk money is awesome

Many families are afraid to talk about money, especially financial plans, a recent Wells Fargo report found. About 26% of older children would rather deal with their parents’ affairs after their death than talk about them while they were alive. In fact, 19% said they didn’t mind getting anything at all as long as they didn’t have that conversation with their parents.

“It’s how you frame the conversation,” Hirshman said. “It’s not about death but really about putting your family in the best emotional, financial and structural position possible.”

Without communicating a clear plan and reason behind it, “you’re taking something painful and making it painful,” he said.

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