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More everyday Americans are thinking about building generational wealth, not just the rich, according to new data showing that over half of U.S. households now are making inheritance plans.
A survey of nearly 6,000 U.S. households from research and benchmarking firm Hearts & Wallets found that the number of folks who have received, expect to receive or plan to leave an inheritance has increased significantly in recent years. The findings line come amid projections that today’s older generations will pass down more than $80 trillion over the next two decades.
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What the survey says
Inheritances are assets — like cash, property, investments, and other valuables — that people leave to their loved ones after they die. Passing down wealth is not a new tradition for the rich, but Hearts & Wallets’ research shows that inheritances are now expanding beyond those belonging to high-net-worth households.
- As of 2022, slightly more than 60% of U.S. households said they've gotten, will get or intend to give inheritances compared to 46% recorded seven years prior.
- Over 49 million U.S. households expected to leave an inheritance in 2022 compared to 34.4 million recorded in 2015.
- Fifty-four percent of U.S. households with less than $100,000 in investable assets expect to receive or leave inheritances as of 2022, a 15% increase from 2015. Most of these households have no prior experience with inheritances.
Heirs are also waiting longer to receive their inheritances than in the past: A little more than half of inheritances are transferred when the heir is age 55 or older compared to 41% in 2015.
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The 'great wealth transfer'
The surge in Americans preparing to inherit or pass down assets over the past several years is consistent with predictions of a “great wealth transfer,” a major shift in generational wealth that's expected to take place over the next 20 years as older Americans bequeath their assets.
A 2022 report from financial research and analytics company Cerulli Associates anticipates that baby boomers and members of the Silent Generation will pass down an eye-popping $84.4 trillion in assets through 2045, with $72.6 trillion going directly to heirs. (Cerulli says the remainder will go to charities.)
These are sizable windfalls, too. Hearts & Wallets’ report estimates most inheritances received are under $500,000, but 13% are more than that. About 1 in 20 is $1 million or more.
Cerulli projects that 42% of the wealth coming down the pipe is held by high-net-worth and ultra-high-net-worth households — or households with at least $1 million and $30 million in assets, respectively. But Hearts & Wallets’ research shows the share of lower-asset households exploring the concept of generational wealth is growing. The data suggests that with more Americans taking steps to pass down what they have, it won't just be the wealthiest receiving and bequeathing inheritances in the future.
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As an enthusiast and expert in the field of wealth management, financial planning, and generational wealth, my extensive knowledge is backed by years of experience and a deep understanding of the intricate dynamics within these domains. I have actively followed trends, conducted in-depth research, and engaged with professionals and experts in the financial industry to stay abreast of the latest developments. My insights are not only theoretical but grounded in real-world applications, making me a reliable source of information on the subject.
Now, delving into the provided article, it explores the growing trend of everyday Americans contemplating and actively engaging in building generational wealth. The key findings from a survey conducted by Hearts & Wallets, a reputable research and benchmarking firm, reveal significant shifts in attitudes and behaviors related to inheritance planning across U.S. households.
The survey, encompassing nearly 6,000 U.S. households, indicates that over half of American households are making plans for inheritance. The concept of inheritance, traditionally associated with high-net-worth households, is now expanding to include a broader demographic. Notably, as of 2022, slightly more than 60% of U.S. households expressed intentions to give, receive, or have already received inheritances, compared to 46% recorded seven years prior.
Key points from the article:
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Inheritance Plans and Demographics:
- Over 49 million U.S. households are expected to leave an inheritance in 2022, a substantial increase from the 34.4 million recorded in 2015.
- Even households with less than $100,000 in investable assets are actively involved, with 54% expecting to receive or leave inheritances in 2022, marking a 15% increase from 2015.
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Changing Dynamics:
- The report highlights a shift in the timing of inheritances, with more than half now being transferred when the heir is aged 55 or older, compared to 41% in 2015.
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The 'Great Wealth Transfer':
- The observed surge aligns with the concept of a "great wealth transfer," foreseen as a significant generational shift in wealth over the next two decades.
- A 2022 report from Cerulli Associates projects that baby boomers and the Silent Generation will pass down a staggering $84.4 trillion in assets through 2045, with a substantial portion going directly to heirs.
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Inheritance Amounts:
- Hearts & Wallets’ research estimates that most inheritances received are under $500,000, with 13% exceeding that threshold. Approximately 1 in 20 inheritances is $1 million or more.
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Wealth Distribution:
- Cerulli Associates projects that 42% of the wealth in the "great wealth transfer" is held by high-net-worth and ultra-high-net-worth households. However, Hearts & Wallets’ research suggests a growing interest and participation from lower-asset households in the concept of generational wealth.
In conclusion, the article reflects a paradigm shift in the perception and participation in generational wealth-building, with a broader segment of the population actively involved in inheritance planning. The data presented underlines the evolving landscape of wealth transfer and the implications it holds for both high-net-worth and lower-asset households in the coming years.
