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When Trillions of Dollars Vanished From Baby Boomers' Retirement Pot - The Wealth Transfer From Boomers Won't Save Gen X and Millennials

In 2010, 60 Minutes Australia investigated the impact of the global stock market crash on superannuation, and met some of baby boomers whose retirement dreams were dashed in the process.

60 Minutes Australia 17 JAN 2024

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Baby Boomers were in the right place at the right time. Following World War II, this generation experienced immense economic growth and prosperity.

The state of affairs afforded them the golden opportunity to accumulate much wealth in their lifetime. Boomers—born between 1946 and 1964—are currently the wealthiest generation on the planet. Their mean net worth falls between $970,000 to $1.2 million, according to Fortune.

In the late 1950s through the 1980s, many families lived relatively well without attending a university and working in the trades. You didn’t need to enter six-figure debt to earn a college degree. Home prices were affordable. This cohort greatly benefited from an unprecedented 40-year rally in stock and housing prices.

The story goes that baby boomers are going to give tens of trillions of dollars to their heirs over the next few decades.

The “generational wealth transfer” has become a media fascination, both for its eye-popping size and because it might help younger generations as they face doubts about their financial security.

That shift is already in the works, and will continue for a couple of decades. According to wealth management firm Cerulli Associates, some $53 trillion will be passed down from boomers to their Gen X, millennial and Gen Z heirs, as well as to charities. That includes both gifts during their lifetimes and inheritances afterward.

But the overwhelming cost of health care for older people means most people in those later generations won’t inherit much, even if their elders seem well-off today.

The bulk of the trillions will go from one group of already wealthy people to another. Cerulli estimated that 68% of the wealth transferred between 2020 and 2045 — which includes boomers as well as older generations — will come from U.S. households with at least $1 million in investable assets. And only 6.9% of households have that kind of wealth to begin with, Cerulli added.

That might be obvious, but the notion still raises the prospect of large numbers of people getting a life-changing amount of money, a last gift from a parent or grandparent that meaningfully alters their circumstances.

Collectively, baby boomers benefited a great deal from America’s economic growth over the second half of the 20th century. The economy boomed in their childhoods as the U.S. became a superpower, and as adults, they had an easier time buying low-cost housing than their children or grandchildren would.

Those who bought homes benefited as those properties increased in value. They’ve had the most time to benefit from the stock market, which has soared roughly 4,000% since 1969.

Feeling They're Falling Behind

Members of the Gen X and millennial cohorts have had to contend with headwinds on multiple fronts. Among them, the explosion in student debt, the rising cost of living, the dot-com bust, the Great Recession, the long but sluggish boom of the 2010s and the Covid-19 pandemic, at more vulnerable stages of their lives and careers.

So those younger generations might feel they could use a leg up.

According to a 2023 survey by the Center for Retirement Studies, Gen-Xers reported having a median of $82,000 in retirement savings, while millennials reported $49,000 in savings.

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Even with many working years ahead of them, some have doubts about their ability to retire with financial security.