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An estimated $84 trillion is poised to be transferred from baby boomers to younger generations in the coming two decades, a phenomenon referred to as the "Great Wealth Transfer." However, a recent Northwestern Mutual survey indicates a significant number of boomers intend to retain their wealth for personal use. According to the study, 45% of wealthy baby boomers prefer to spend their assets during their lifetime, with only 22% planning to leave an inheritance.
This decision stems from various factors, including rising living costs and healthcare expenses. Fidelity projects that a typical 65-year-old will need around $165,000 for healthcare in retirement, while Genworth estimates assisted living costs at approximately $64,200 annually.
Younger generations, particularly millennials and Gen-Z, are now grappling with the possibility that inheritances they counted on may be less than anticipated. A significant portion of these demographics—32% of millennials and 38% of Gen-Z—expect an inheritance to be crucial for their financial security. Experts emphasize the importance of open discussions about wealth transfer to prevent misunderstandings within families.