- \n
- \nAfter accounting for liabilities, removing the top 1 percent of households and subtracting retirement spending, taxes and fees, approximately $36 trillion of boomers\u2019 $93 trillion in assets will transfer to heirs over the next 20 years<\/p>\n<\/li>\n
- \nNearly 75 percent of inheritance recipients already have a higher net worth, meaning most transferred wealth is likely to be saved or invested rather than spent<\/p>\n<\/li>\n
- \nThe $8 trillion expected to be spent creates a targeted lift concentrated mostly in autos, housing, travel and retail<\/p>\n<\/li>\n
- \nThe transfer is underway: one in four millennial homeowners received parental down payment assistance, and skip-generation travel is rising as boomers increasingly choose to share their wealth earlier<\/p>\n<\/li>\n<\/ul>\n
SAN FRANCISCO–(BUSINESS WIRE<\/a>)–
\nNew research from Visa Business and Economic Insights (VBEI) finds that the great wealth transfer is already influencing major financial decisions, from home purchases to travel and long-term saving. The research estimates that approximately $36 trillion will transfer from baby boomers to Gen X and millennial households over the next 20 years.<\/p>\n\nThe findings also show that most of this wealth will flow to households that are already financially secure, making the spending impact more targeted than transformational.<\/p>\n
\n\u201cFor businesses in big-ticket sectors like housing and travel, this is not a future trend to watch,\u201d said Wayne Best, chief economist at Visa. \u201cIt is already influencing consumer decisions\u2014and shaping where growth will be distributed in the years ahead.\u201d<\/p>\n
The transfer is large, but more concentrated than it appears<\/b><\/p>\n
\nBaby boomers hold at least $93 trillion in assets, more than three times U.S. GDP. However, VBEI finds that the amount that reaches heirs is reduced significantly once you factor in debt, retirement spending, taxes, and the wealth held at the very top. The result: approximately $36 trillion transferring to Gen X and millennial households over the next 20 years, equivalent to roughly $515,000 per inheriting household.<\/p>\n
Most transferred wealth will be saved or invested<\/b><\/p>\n
\nNearly 75 percent of those receiving an inheritance already have a higher net worth than the median household.1<\/sup> As a result, $28 trillion of the $36 trillion is likely to be saved or invested. This dynamic represents a significant opportunity for banks, wealth managers, and fintech firms competing for assets from newly inheriting households over the next two decades.<\/p>\n
The spending lift is real but targeted to specific categories<\/b><\/p>\n
\nThe impact will likely show up most in the areas where consumers are already making major financial decisions.<\/p>\n
\nSpending on autos is expected to see a 6.4 percent average annual lift over the next 20 years.2<\/sup><\/p>\n
\nOverall, the $8 trillion expected to flow into consumer spending will lift annual real spending growth by approximately 0.1 percentage point per year through 2046, a modest boost rather than a major shift in the economy.3<\/sup><\/p>\n
Families are choosing to share wealth earlier<\/b><\/p>\n
\nMore families are transferring wealth earlier while they can see its impact. One in four millennial homeowners received parental down payment assistance, and 26 percent reported they would not have been able to purchase their current home without it. More than half of individuals expecting to receive an inheritance cite it as critical to their ability to purchase a home, a figure that rises to 69 percent among millennials.<\/p>\n
\nIn travel, 28 percent of grandparents have already taken a skip-generation trip with their grandchildren, without the children\u2019s parents, and 35 percent plan to do so within the next three years.<\/p>\n
\n66 percent of boomers say they want to enjoy their wealth or have heirs enjoy it while they are alive, compared to 34 percent who plan to preserve it for after death.4<\/sup><\/p>\n
What this means for consumers and businesses<\/b><\/p>\n
- \n
- \nFor consumers, family financial support may help younger households buy homes, travel and reach major milestones sooner<\/p>\n<\/li>\n<\/ul>\n
- \n
- \nFor businesses, the opportunity will be focused in sectors where inherited wealth is already driving major purchases, especially housing, autos, travel, retail and financial services<\/p>\n<\/li>\n<\/ul>\n
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- \nFor financial institutions, inherited wealth creates an opportunity to support households as they save, invest or purchase property<\/p>\n<\/li>\n<\/ul>\n
\nThe full report is available at https:\/\/usa.visa.com\/partner-with-us\/visa-consulting-analytics\/economic-insights\/great-wealth-transfer-reality-check.html<\/a><\/p>\n
Methodology<\/b><\/p>\n
\nVBEI\u2019s analysis is based on internal economic modeling, data from the Federal Reserve Board, the U.S. Department of the Treasury and the U.S. Department of Labor, as well as third-party consumer survey research.<\/p>\n
FAQ<\/b><\/p>\n
How large is the great wealth transfer?
\n
<\/b>Visa Business and Economic Insights estimates that about $36 trillion will transfer from baby boomers to Gen X and millennial households over the next 20 years, after accounting for debt, retirement spending, taxes and other factors.<\/p>\nHow much of that wealth will actually be spent?
\n
<\/b>Only a portion\u2014about $8 trillion\u2014is expected to translate into consumer spending, as most recipients are already financially secure and more likely to save or invest what they receive.5<\/sup><\/p>\nWhere will the spending impact be most visible?
\n
<\/b>The impact is expected to be concentrated in housing, autos, travel and retail, where consumers are already making major financial decisions.<\/p>\nIs this a future trend, or is it happening now?
\n
<\/b>The transfer is already underway, showing up in real-time decisions like down payment assistance for homebuyers and increased multigenerational travel, as more families choose to share wealth earlier.<\/p>\nAbout Visa Business and Economic Insights (VBEI)<\/b><\/p>\n
\nVisa Business and Economic Insights (VBEI) provides data-driven analysis of global economic trends, consumer spending patterns and the evolution of digital commerce, drawing on proprietary VisaNet transaction data, economic modeling and third-party research. The team publishes regular research across macroeconomics, consumer behavior and payments innovation. To subscribe: https:\/\/globalclient.visa.com\/visaeconomicnews-subscribe<\/a><\/p>\n
About Visa<\/b><\/p>\n
\nVisa (NYSE: V) is a world leader in digital payments, facilitating transactions between consumers, sellers, financial institutions and government entities across more than 200 countries and territories. Our mission is to connect the world through the most innovative, convenient, reliable and secure payments network, enabling individuals, businesses and economies to thrive. We believe that economies that include everyone everywhere, uplift everyone everywhere and see access as foundational to the future of money movement. Learn more at Visa.com<\/a>.<\/p>\n
Forward-Looking Statement<\/b><\/p>\n
\nThis release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that relate to, among other things, our economic outlook. Forward-looking statements are generally identified by words such as \u201cbelieves,\u201d \u201cestimates,\u201d \u201cexpects,\u201d \u201cintends,\u201d \u201cmay,\u201d \u201cprojects,\u201d \u201ccould,\u201d \u201cshould,\u201d \u201cwill,\u201d \u201ccontinue\u201d and other similar expressions. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to predict. We describe risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, any of these forward-looking statements in our filings with the SEC. Except as required by law, we do not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise.<\/p>\n
Disclaimer<\/b><\/p>\n
\nThe views, opinions, and\/or estimates, as the case may be (\u201cviews\u201d), expressed herein are those of the Visa Business and Economic Insights team and do not necessarily reflect those of Visa executive management or other Visa employees and affiliates. This presentation and content, including estimated economic forecasts, statistics, and indexes are intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice and do not in any way reflect actual or forecasted Visa operational or financial performance. Visa neither makes any warranty or representation as to the completeness or accuracy of the views contained herein, nor assumes any liability or responsibility that may result from reliance on such views. These views are often based on current market conditions and are subject to change without notice.<\/p>\n
- \nFor financial institutions, inherited wealth creates an opportunity to support households as they save, invest or purchase property<\/p>\n<\/li>\n<\/ul>\n
- \nFor businesses, the opportunity will be focused in sectors where inherited wealth is already driving major purchases, especially housing, autos, travel, retail and financial services<\/p>\n<\/li>\n<\/ul>\n
- \nFor consumers, family financial support may help younger households buy homes, travel and reach major milestones sooner<\/p>\n<\/li>\n<\/ul>\n
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