Next Generation Wealth

Money isn’t the issue. The issue is going to be what will the next generation do with their wealth.

I recently learned an alarming statistic in the realm of next generation wealth.  According to the Williams Group wealth consultancy, 70% of wealthy families lose their wealth by the second generation, and 90% by the third. 

What does this tell us about how we are preparing the next generation to handle inherited wealth? 

When surveyed by U.S. Trust, 78% of high net worth individuals indicated that the next generation is not financially responsible enough to handle inheritance; 64% admit they have disclosed little to nothing about their wealth to their children for a number of reasons including worry that they will become lazy and entitled and fear of information leaking out to the public.

Deloitte University Press reports that the Silent Generation (those born 1928-1945) controls $24 trillion in wealth; Baby Boomers (born 1946-1964) own $36 trillion; Generation X (born 1965-1980) $9 trillion; and Generation Y – aka., Millennials (born 1981-1997) $3 trillion. 

This $72 trillion in wealth owned by Americans is expected to grow to $120 trillion by 2030.  That means that the Generation X and Millennial generations are expected to inherit more than $60 trillion over the next 15 to 20 years.  Given the track record of inherited wealth one has to ask are we doing enough assisting them in stewarding their upcoming inheritance?

There will be plenty of money to go around.  Money isn’t the issue.  The issue is going to be what will the next generation do with their wealth.  Presently, the Silent and Baby Boomer Generations contribute 2/3 of all current charitable gifts in America which makes sense where they are in life.  They feel a sense of loyalty and obligation to organizations.

Generation X and Millennials however, are less consistent, peer motivated, and a bit more random in their giving.  They are impacted by an inspirational story of need and compelled to support when friends ask.

As we all know, it’s not the amount of money we have it is what we do with it that matters.   “Understand that pride of accomplishment from one’s own hard work is the way to realize true self-esteem, and not from your money,” my homeless friend, Mr. Eugene Howe would tell me. 

In that respect the Gen X and Millennial generations have it together.  They love to volunteer and serve those in need as a part of their philanthropy.  However, if all of the Silent and Baby Boomer generations’ wealth is left to the next generation and their current giving habits continue into their later years, what might happen to our charities? 

Some of the Silent and Baby Boomer generation wealth could be left to their favorite charitable organizations reflecting their values and interests.  Simultaneously, maybe we need to do more in the area of teaching and demonstrating for the next generation about generosity and handling wealth? 

Never has there been so much wealth amassed in the history of the world as in America today.  There is no precedent or history from which to learn.  We are navigating unchartered waters never before traveled.

Are you considering ways to educate and develop the next generation about wealth? 

Are you considering ways you can perpetuate support for your favorite charities through your estate plan?

For more thoughts on generosity pick up a copy of the highly applauded book, “An Unexpected Legacy: Strategies of Generosity.”    Click here to place your order.