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The Greatest Gift of All

The Greatest Investment to come by the greatest generation.

Blood is thicker than water, which will soon be put to the test in the greatest wealth transfer ever seen.  Recently, Cerulli has predicted that with almost all the Boomer generation into retirement, the massive wealth transfer estimated to be $84 trillion has started.  Between now and 2045, $78 trillion of that will be transferred, upon death, to heirs of Boomers with at least $2 trillion a year until it peaks at a forecasted $5 trillion a year in the 2040s.

Yes, trillions!

Gen Xers stand to benefit the most and surely this will lead to complex and dynamic impact on most aspects of their lives.  Given what we know about the differences in attitudes and behaviors of Generation X and Millennials, this unprecedented wealth transfer creates not only financial complexity when considering taxation and financial service support but spending habits will also be quite different.

The common trope for Boomers is how they work tirelessly if not obsessively, but rather than “spending” they are more into saving and investing.  This is understandable given they are children of the Great Depression. 


Can you say delayed gratification!  If that wasn’t enough, the Boomers have been recipients of quite good returns on those investments with the Stock market up 4000% since 1969 and housing prices up about 2.4 times the rate of inflation over that same period.  Today, the median home price is around $460,000.  No doubt during the Baby Boomers life, the US Economy has boomed, innovation has exploded making the US a superpower.  Contrast that with the most recent generations, the Xers and Millennials, they have had to contend with the bust, Great Financial Crisis and Covid.  To make things worse, all with the backdrop of rising cost of education, inflation, and global competition.  But like most everything, from the seeds of crisis grow the gargantuan trees of progress and great jumps in innovation and technology and largely a rise in prosperity. 

I remind all that the iPhone launched in 2007, YouTube in 2005, and Facebook in 2004.  In fact, if you haven’t been watching the news, these 3 names aren’t even on the cutting edge of “today’s” new tech which is artificial intelligence, commonly known as AI

Forget that we haven’t even mentioned things like blockchain, Tesla, and quantum computing…

But back to the greatest wealth transfer to been seen in modern history and the real question is what that will mean for us as investment professionals.  Which may not be that interesting compared to what it will mean for the next generation.

With money comes responsibility.  We won’t go into what responsibility means to Gen X and Millennials, but we can highlight some of the issues. 

For the Baby Boomers there will be rising costs of healthcare which will undoubtedly eat away at that wealth transfer number.  Even now health care costs are forecasted to rise over 100% over the next 20 years if the last 20 were a predicter. It will mean more jobs and more responsibility to care for the Boomers.  An opportunity for the next generations but unfortunately there aren’t enough people in the next generations given their smaller size.  Maybe the solution is in AI and robotics, Elon Musk seems to think so. It may also be that returns on investments are harder to come by as potentially asset returns are harder to come by in the future. Surely US and state taxes must go up given the current fiscal situation faced by our federal and state government, higher taxes mean lower net returns.  Worse is the negative effect on economic growth that higher taxes have as posited by Art Laffer, creator of the Laffer Curve.

That said, given the massive size of this transfer and the potential for that capital to move through the system “with fresh eyes” one can wonder with optimism for the Gen Xers and Millennials as the Boomers give a “push” one last time.

Imagine the opportunities!

I write this a son of Boomer parents but as the last Boomer (1964) of a generation, there isn’t a better investment we can make than an investment in people, our young people.

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