A recent survey by Charles Schwab reveals a generational divide in how and when wealthy Americans plan to leave money to their heirs. Millennials and Generation Xers prefer to transfer wealth during their lifetimes, while baby boomers prefer to wait until after they are dead. The survey found that millennials and Gen Xers with at least $1 million in investable assets were more than twice as likely as boomers to agree with the statement, “I want the next generation to enjoy my money while I’m still alive.” This inclination to share wealth now contrasts sharply with baby boomers’ approach, many of whom want to enjoy their wealth themselves during their lifetime.
Roughly half of millennials and 44% of Gen Xers want to share their wealth while they are alive, compared to only 21% of boomers. Instead, 45% of boomers agreed with the statement, “I want to enjoy my money for myself while I’m still alive.”
According to Catherine Crumm, a certified financial planner in Ann Arbor, Michigan, younger Americans have the highest needs and the lowest ability to have any money coming in. “It’s the 20- and 30-year-olds who need it the most,” she said.
The generational divide is also evident in the willingness to plan for inheritance. Nearly every millennial and Gen Xer surveyed by Schwab said they plan to distribute at least some of their wealth during their lifetime, compared to only 56% of boomers.
Generational wealth transfer preferences shift
A previous study by Northwestern Mutual found a significant gap between younger Americans’ expectations to receive an inheritance and older Americans’ plans to leave one. For instance, while 38% of Gen Zers and 32% of millennials expect to inherit, only 22% of boomers plan to leave an inheritance. Financial planners note that some older Americans are concerned about outliving their money, which might make them more cautious about distributing their wealth early.
“Nobody knows when they are going to die, and the idea of running out of money is rightfully terrifying to most people,” said a certified financial planner in Houston. For younger Americans, achieving financial stability can be challenging due to high home prices and significant child care costs. “I feel like it’s just a lot harder for millennials, especially, to get a foothold,” noted a financial planner in Denver.
This generation’s struggle may drive their desire to help their own children financially while they themselves are still alive. In conclusion, while boomers might prefer to retain control over their wealth until death, millennials and Gen Xers are more inclined to share their fortunes during their lifetimes. This trend reflects evolving financial planning philosophies that emphasize values and family goals.