Fortune For Future
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Fortune For Future

Fellow Millenials, Don’t Botch the World’s Largest Wealth Transfer

How to Navigate the Upcoming $68T Handoff

Sixty-Eight Trillion Dollars ($68,000,000,000,000). That’s how much moola Forbes estimates will transfer to millennials by the year 2030…that’s a lot of avocado toast. That’s over three times the U.S. annual gross domestic product (GDP) according to the World Bank. I’m sure a few millennials will read this and think, “OK, boomer”, but relax, I’m one of you, and I happen to love avocado toast.

But the coming wealth transfer is no joke, and while the millennial financial narrative often revolves around massive student debt, PTSD from the great recession, and out of reach home prices, this massive transfer of wealth presents an opportunity to re-write the millennial financial story. Will this transfer be a smooth changing of the guard or a fumbled handoff? It depends.

It’s no secret that there are some philosophical and lifestyle differences from one generation to the next, but I don’t believe the hyperbolic descriptions of millennials as selfish, entitled, lazy, and narcissistic. Likewise, I don’t blame prior generations for the issues that have plagued millennials, as too much progress has been made to focus on the negative, but these generations need to work collectively to ensure the wealth-building of the past is not lost in the future.

Talk about it:

Money conversations are just different. Up there with sex, religion, and politics, money can quickly turn a peaceful Thanksgiving celebration into an all-out free for all. Money makes perfectly normal people say and do incredibly out of character things. That’s something I’ve gathered as I’ve worked with more and more clients and their families. We’re taught not to talk about money, so we whisper, and only when pressed. While I respect the humility, this reluctance to have financial dialogue leads to major conflicts, stress, and damaged relationships. It’s important to have these conversations early, while all parties have the cognitive capacity to discuss, understand, and plan for the preservation and growth of the family’s wealth from generation to generation.

Just like passing along other values and family stories, discussing financial values sets the stage for better management across generations, an understanding of the family investment philosophy, and a smooth transition when the time unavoidably arises. These meetings present ideal opportunities for the aging generation to detail future care plans, update their financial inventory, review account beneficiaries, and trusted contacts, etc. They also provide future generations the chance to ask questions, and the sooner the questions are answered, the easier the transfer.

Learn now:

Inheriting assets can be an overwhelming experience. Combine that with the grief of losing a loved one and you have the perfect recipe for a financial blunder. Millennials should start learning about long-term investing, retirement planning, financial literacy, etc. because learning on the fly is stressful, and you don’t want to make critical financial decisions while in a muddled state of mind. If just thinking about these things causes your head to spin consider establishing relationships now with trusted professionals who can help guide you when needed (financial advisor, CPA, etc.).

Don’t count on it:

Future inheritance is not a retirement plan and treating it like one is a grave mistake! Planning on coming into money in the future is not an excuse to ignore your retirement planning. Fortunes have been squandered and, in a world where healthcare and long-term care costs are on the rise, even large nest eggs can be outlived. Genworth’s 15-year cost of care study found that long-term care increased 67 percent over the 15 years examined, far outpacing inflation. According to Genworth, the national average cost of a private room in a nursing home is just shy of $100,000 per year, an amount that can quickly deplete one’s assets. Add to that other living expenses, bucket list experiences, medications, etc., and there may not be enough remaining to cover another retirement.

We know it’s coming. It’s time for everyone to gather around a massive plate of avocado toast and have some conversations. Ask questions, be honest, and plan for your family’s future.

*Opinions expressed here are those of the author. This is not intended to provide recipients with information or advice upon which to base an investment decision. Past performance is no guarantee of future results.*

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James Vermillion

James Vermillion

Writing on the intersection of Meaning and Money. Founder of Vermillion Private Wealth. Optimist. Podcaster. Stories aren’t financial advice.