A Charles Schwab survey found high-net-worth Gen X and millennial Americans are far more likely than baby boomers to pass wealth to heirs during their lifetimes, though younger donors are also more likely to attach conditions.
By yourNEWS Media Newsroom
Wealthy baby boomers are far less likely than younger high-net-worth Americans to share their money with heirs while they are still alive, according to a Charles Schwab survey that points to a major generational divide in how families may handle the coming transfer of wealth.
The Charles Schwab report, released Monday, surveyed 1,005 high-net-worth Americans with at least $1 million in investable assets. It found that Gen X and millennial respondents were more than twice as likely as baby boomers to say they want the next generation to enjoy their money while they are still alive.
Only 21% of wealthy boomers agreed with the statement, “I want the next generation to enjoy my money while I’m still alive.” By comparison, 44% of wealthy Gen X respondents and 53% of wealthy millennials said the same.
The divide was even sharper when respondents were asked whether they planned to distribute at least some of their wealth during their lifetimes. Schwab found that 97% of wealthy Gen X respondents and 97% of wealthy millennial respondents said they planned to do so, compared with 56% of wealthy boomers.
“According to our survey, younger Americans could be poised to reshape legacy planning and the future of how wealth is passed to the next generation,” Andrew D’Anna, managing director of retail client experiences at Charles Schwab, said in a statement accompanying the survey results.
Baby boomers, born between 1946 and 1964, are the wealthiest generation in American history. But Schwab’s findings suggest many wealthy boomers are prioritizing their own spending or traditional inheritances over lifetime transfers to children and heirs.
When asked how they prefer to pass wealth to the next generation, 45% of wealthy boomers said they want to enjoy their money for themselves while they are alive, according to Schwab’s study. Only 11% of wealthy Gen X respondents and 15% of wealthy millennials gave the same answer.
Another 34% of boomers said they want to preserve wealth so they can leave an inheritance after death. The remaining 21% said they want heirs to enjoy their money while they are still living rather than receive it later through an inheritance.
The survey also found that younger wealthy Americans expect to pass down larger sums than boomers. Gen X respondents who plan to transfer wealth expect to leave an average of $4.8 million, while millennials expect to pass on $4.7 million. Boomers expect to pass on an average of $3.1 million.
Across all wealthy Americans who plan to transfer assets, Schwab found that the average expected amount is $4.1 million.
The findings come as economists and financial advisers continue to examine whether the so-called Great Wealth Transfer will deliver as much money to younger generations as expected.
Financial consulting firm Cerulli has estimated that about $124 trillion could change hands by 2048, much of it from Americans 65 and older. Chayce Horton, a senior analyst at Cerulli, previously told Money that the Great Wealth Transfer would be “the most significant transfer of wealth intergenerationally that we’ve ever seen in the world.”
Other estimates have put the coming transfer at roughly $84 trillion from the silent and boomer generations to Gen X, millennials and Gen Z, according to reporting on the Great Wealth Transfer.
But Schwab’s data suggest some of that wealth may not reach younger generations as soon as expected, especially if boomers choose to spend more during retirement or preserve assets until death rather than distribute them earlier.
Collectively, boomers hold about $85 trillion, representing roughly half of all household wealth in the United States, according to the most recent Federal Reserve data. Gen X holds nearly $47 trillion, while millennials hold $23 trillion.
Another factor is the rising cost of long-term care, which can significantly reduce inheritances even among wealthy families. A 2019 report from the U.S. Department of Health and Human Services found that about 70% of Americans who reach age 65 eventually develop a “severe” need for long-term care services.
Despite that risk, many Gen Xers and boomers have not financially prepared for long-term care needs, according to Northwestern Mutual. The costs can be substantial. Part-time home-health aide support for basic tasks typically costs more than $4,000 per month, while a private room in a nursing home can cost nearly $10,000 per month.
Schwab’s survey also found that younger wealthy Americans, while more willing to transfer money during their lifetimes, are more likely to attach conditions to that money. Nearly all wealthy Gen X and millennial respondents said they have “some kind of stipulation” on how the money may be used once transferred. Only 34% of wealthy boomers said the same.
That distinction suggests younger generations may be more open to giving earlier, but less willing to hand over wealth without restrictions. Boomers, by contrast, appear less likely to transfer wealth during life but more likely to do so without strings attached when they do.
The survey adds uncertainty to expectations surrounding the Great Wealth Transfer. Younger heirs may eventually receive substantial assets, but Schwab’s findings indicate timing, conditions, healthcare costs and retirees’ own spending priorities could all reshape how much money ultimately reaches the next generation.
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