Young People Are About to Get Rich in a Massive Transfer of Generational Wealth

It’s weird to think about, but consider how money you’ll inherit plays into your personal finance today and when you’re old

Rocco Pendola
Nov 15 · 7 min read
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Photo by Luke Porter on Unsplash

Typically, when you click or tap on an article about young people and their relationship with money, the author proceeds to shit on young people.

That will not happen in this article. In fact, I intend to do the complete opposite.

I’m a staunch proponent of people younger than me.

As a proud member of Generation X (I missed being a millennial by six years), people in their 20s and 30s generally inspire me. They keep me focused on the present and what I want to accomplish in the future, using the past as little more than an informed lens into how to be better and help make it all happen.

I regret briefly jumping on the bandwagon that lamented a surge in millennial interest in the stock market this past Spring into Summer. I reconsidered my position and realized that this dissing of young people by mostly older people (white men, in particular) isn’t helpful or nuanced.

In May of 2020, CNBC published one of dozens of stories detailing the millennial move into the stock market. They were doing — no doubt — some dumb things, such as day trading, chasing momentum stocks, and speculating on bankrupt or near-bankrupt stocks:

But they also made incredibly smart moves:

I scoff at the guy warning Robinhood investors like they’re children.

Young investors took some fliers. But they also bought pandemic plays — from Apple to Amazon and Peloton to Zoom — that will stand the test of time and, by and large, turn out to be solid long-term investments. It’s no different, in theory, than your baby boomer parents buying companies such as Coca-Cola and Emerson Electric 50 years ago.

But here’s one thing the people chiding the millennial generation fail to take into account. I’ll let a recent article in do the honors:

In other words, as old people (such as our parents) die, young people (such as Gen Xers and millennials) — all things equal — inherit their money. For many investors, say under age 50 with living parents, this changes the game.

It’s a somewhat psychological thing. If you’ve read my writing more than once, you know I’m obsessed with the psycho-emotional components of how people act and react with money.

As I noted in a recent Making of a Millionaire article:

If you know you’re going to inherit money — even if you can’t be sure when — it’s going to change how you handle money in the here and now. It might be a cold thing to think about. But the fact is people die. When this happens, offspring often receive financial windfalls — be it cash or a home they can sell for cash or close to it.

For example, I have a pretty good idea how much money I stand to inherit when my parents pass away. My dad just turned 86. My mom is 73. Here’s hoping the inevitable doesn’t happen for a good 20 or 30 years (knock on wood!). But it’s going to happen. Even if I don’t run around thinking about it every day, the relative certainty of receiving what will probably be somewhere in the low-six figures plays into my long-term financial planning.

It has to.

I’d be stupid to ignore it.

The millennial generation, who, according to the above-linked article, will inherit $22 trillion by 2042 would be stupid to ignore it also.

How does this impact us?

First and foremost, it’s just another example that we should not place our personal finance and investing focus on traditional conceptions of retirement. If I am pretty confident, I’ll receive, say, $250,000 by the time I’m 65 via inheritance, I should work this assumption into how I spend, save, and invest over the next 20 years.

I could consider that money gravy. Because who knows? My parents could blow it, have less wealth than I think they do, or have mortgage-related debt I don’t know about it. In this scenario, you don’t want to count on this money.

However, if you know your parents live free and clear (or close to it), you can shift focus from conventional approaches to retirement savings to how to live your best personal finance life now. You can allocate your cash flow to satisfy your needs and wants today and in the near-term rather than obsessing over how much money you’ll have at some magical and mystical retirement age.

I explain ways to do this here:

And here:

I hesitated to introduce this subject into our personal financial equation. It’s an uncomfortable subject to bring up. For legitimate reasons, we don’t want to think about our parents dying. We also don’t want the same old white male critics to brand anybody younger than them who does things differently than them as lazy and “making all the classic mistakes.”

At the same time as I experienced this hesitation, I was reading research and articles like the one from about the wealth transfer millennials can expect to receive. It’s real. We’re not all going to inherit money. Some of us will inherit way less or much more than others. As with anything else, assess and anticipate your situation and plan accordingly.

Treat it like Social Security. You’re not going to rely on it. However, you shouldn’t act as if it doesn’t exist. Cynics argue that Social Security will not be around for millennials or even Generation X. This is alarmist bull.

You can literally go online right now and see how much money you’ll receive each month based on your earnings history and age you intend to collect. Most of us will collect one or two thousand dollars per month somewhere between 62 and 70 years of age.

If I can reasonably assume $2,000 a month starting in my 60s alongside a lump sum of $250,000 (which I can hypothetically pay out to myself at a rate of $12,500 a year over 20 years), I need to consider it in conjunction with everything else I’m doing now.

Even if it happens on a subconscious level, I think many young people realize this eventuality. And it influences how they manage their money today. I don’t think there’s anything wrong with this.

While I expect my daughter to create a life and attendant personal financial plan of her own as she heads into adulthood, I’m also saving for her. I’m accumulating wealth on her behalf that she can use when she needs it and inherit when I’m dead.

At age 17, she knows approximately how much money she stands to have access to when she turns 18. This factors into her college-related plans. It’s no different for her to look ahead to how much wealth she can expect to inherit from me as she starts making longer-duration plans.

There’s also a flip side to this. Not every young person will participate in this transfer of wealth. Some boomers have nothing to pass on. Or they will not pass it on for myriad reasons. If you’re in this situation, strategize how you spend, save, and invest now through that reality.

The millennial generation is smarter — and savvier — than (relatively) old people give them credit for. They know a massive wealth transfer lies ahead. Don’t look down on them for having the foresight to take this into account as they live their presents and plan their futures.

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Rocco Pendola

Written by

I write about doing life and personal finance, focusing on the psychology of our relationships with other people and money. I’m anti-guru, pro-empowerment.

Making of a Millionaire

Stories about money, personal finance and the path to financial independence.

Rocco Pendola

Written by

I write about doing life and personal finance, focusing on the psychology of our relationships with other people and money. I’m anti-guru, pro-empowerment.

Making of a Millionaire

Stories about money, personal finance and the path to financial independence.

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