Six-Chart Sunday – Inheritances

The first of the Baby Boomer generation turns 80 this year, with the fourth and likely last of the Baby Boomer Presidents well-into his second term. Leadership will eventually pass to younger generations. But Boomers still hold much of the wealth and many of the offices, and they appear in no hurry to hand things over. A brief look at generational inheritance.

While the transfer will be enormous, the redistribution won’t be. Boomers hold $93 trillion, but after debt, retirement spending, taxes and charity, Visa estimates roughly $36 trillion actually reaches Gen X and Millennial heirs over the next two decades — about $515,000 per inheriting household. Nearly three-quarters of those heirs are already in the top 10% of net worth. Barely 1% come from the bottom half. And this is after excluding the wealthiest 1% entirely from their analysis.

Boomers inherited & accelerated an extraordinary postwar expansion: real disposable income per person grew to five times its 1946 level, infant mortality fell roughly 84%, and the share of adults with a bachelor’s degree is more than six times its 1950 level.

The public balance sheet moved the other way. Debt held by the public is back to its post-World War level with substantially greater future obligations. Social Security’s retirement trust-fund reserves are projected to be depleted in late 2032; the Medicare Hospital Insurance’s reserve in 2033.

The harder inheritance may be confidence. Just 33% of Gen Z in one survey called America the best place to live, versus 66% of Boomers, while fewer than one in five Americans now trust the federal government. Assets and liabilities transfer automatically… confidence must be earned anew.

When talking about generations, there’s no one better than Neil Howe, author of the extraordinary “The Fourth Turning Is Here.” We discussed that great book – positing that history is driven by the interaction among successive generations – when it came out 3 years ago: