Gen X Poised to Benefit the Most from the $84 Trillion Wealth Transfer
An often-overlooked segment of the population, Generation X is about to make headlines because of the $84 trillion Great Wealth Transfer expected to occur over the next ten years.
This massive transfer of wealth will predominantly benefit Gen X, positioning them as the biggest winners in the near term, despite millennials and Generation Z anticipating substantial inheritances as well.
According to recent studies, the generational wealth shift will have profound implications, and the financial world should take note.
The Wealth Transfer: An Overview
A startling revelation is being brought to light by the Wealth-X study, which underscores that the average age of individuals set to inherit fortunes in North America is around 46.1 years old.
This demographic, primarily comprised of Generation X, is defined in the study as those between the ages of 44 and 59.
In contrast, millennials are identified as individuals between 28 and 43 years old.
The inheritance expectations indicate that those in Generation X will receive windfalls sooner rather than later.
How Inheritance Trends Offer a Spotlight to Generation X
The traditional focus on millennials and Generation Z has somewhat obscured the immense potential of Generation X.
Wealth management firms, luxury companies, and private banks have been zeroed in on younger clients, aged in their 20s and 30s, anticipating that these age groups will soon be the recipients of tremendous family wealth.
However, the new findings compel these enterprises to shift their strategies.
According to Alliant Credit Union, over half of millennials are expecting inheritances of at least $350,000.
This substantial figure shows the financial expectations of younger generations, but it does not highlight the more immediate and potentially larger inheritances awaiting Generation X.
The Scope of the Wealth Transfer
The Wealth-X report’s revelation about the wealth distribution showcases that the next decade will witness 1.2 million individuals, each with a net worth of $5 million or more, passing on a mind-blowing $31 trillion in wealth.
Moreover, nearly two-thirds of this amount—approximately $20 trillion—will come from ultra-wealthy individuals worth $30 million or more.
Adding another layer, an outsized portion of the wealth transfer will be executed by the super-wealthy, defined as those boasting net worths of $100 million or more.
Among these, billionaires alone will account for a staggering $5 trillion of the total wealth passed down.
A Spotlight on Generation X
Considering Generation X within this context reveals that our collective attention should not merely be on the expected 20s and 30s inheritors; the more pressing immediate focus should be on those aged 44 to 59.
According to the Wealth-X report, while media attention often focuses on millennial and Generation Z heirs, it is actually Generation X that will inherit first from their affluent parents.
As a result, financial planners, estate consultants, and luxury product marketers should adjust their strategies accordingly.
Why Generation X Stands to Gain the Most
The financial impact on Generation X cannot be overstated.
These individuals are more likely to receive substantial sums because they are positioned directly in the line of inheritance from today’s wealthy parents.
Unlike millennials and Gen Z, who are expected to receive wealth as grandchildren—often in less substantial amounts—Gen X stands to obtain more significant immediate benefits.
‘The Baby Boomers‘ massive wealth will predominantly shift to this middle-aged generation, enabling them to potentially increase their investment in businesses, real estate, and luxury goods.
This transformative financial influx will not only affect individual lives but will have broader economic implications.
Wealth Concentration: Analyzing the Distribution
Another interesting aspect is how wealth will be concentrated among a small fraction of individuals.
The top-tier wealth—defined as those owning $30 million or more—constitutes a considerable percentage of the $31 trillion in expected transfers.
This wealth concentration implies that Generation X inheritors in the upper echelons of wealth have the potential to reshape financial markets’ dynamics.
Changing Values and Priorities of Heirs
As wealth transfer accelerates, it is essential to recognize that the values and priorities of the next-generation inheritants strongly differ from those of their benefactors.
The new wave of wealth will bring along changes influenced by technology, environmental concerns, social justice considerations, and a more global outlook.
Many heirs are expected to focus extensively on new technologies, clean-energy initiatives, and impact investing.
Given these value shifts, wealth managers, luxury brands, and philanthropic organizations will need to adapt.
Traditional business structures and legacy plans may not harmonize perfectly with the ambitions and ethical inclinations of the new inheritors.
Implications for Wealth Management Firms
The foresight shared by the Wealth-X report offers invaluable guidance for wealth management firms.
In charting their course over the next decade, these firms must broaden their scope to include Generation X, which is now poised to soon gain increased financial influence.
By tailoring their services to appeal to and support middle-aged clients, they can capture opportunities presented by the Great Wealth Transfer.
Conclusion
Generation X, long unseen in the grand narrative of the wealth shift, stands on the cusp of becoming the central figure in the $84 trillion Great Wealth Transfer.
While millennials and Generation Z focus on their futures, the immediate and significant financial benefits awaiting Gen X cannot be ignored.
The onus lies on wealth management firms and luxury brands to pivot and appreciate the looming potential of Generation X.
This impending wealth distribution not only portends individual prosperity but also signals broader economic evolution shaped largely by this middle-aged demographic.
