Report: Billions Less in Inheritance Expected Due to Taxes and Debt
Baby boomers are set to transfer an estimated $36 trillion in assets to younger generations. However, a significant portion will be reduced by taxes, fees, and existing debt.
The Baby Boomer generation, currently holding substantial wealth, is expected to pass down considerably less to heirs than initially projected. A report from Visa Business and Economic Insights estimates that approximately $36 trillion will transfer to Gen X and millennial generations over the next two decades.
The report highlights that a significant portion of this wealth, estimated at $8 trillion, will be consumed by taxes, fees, and charitable donations. Additionally, existing debts are projected to reduce the inheritance by over $4 trillion. Many older homeowners carry mortgage debt and other liabilities into retirement.
Ultimately, Visa estimates that of the $36 trillion to be transferred, around $28 trillion will likely go into savings and investments, including property. Only an estimated $8 trillion of the inherited wealth is expected to be spent by the recipients.
This wealth transfer is notable as the Baby Boomer generation (born 1946-1964) holds more assets than Gen X and millennials combined, with their total wealth estimated at a minimum of $93 trillion.