As older generations approach retirement age, the potential for a large wealth transfer from Baby Boomers to their heirs has become a topic of interest and discussion. However, despite all the talk, the actual wealth transfer may not reach the heights that many anticipate.
One of the primary reasons why the expected transfer of wealth from Boomers to their children and grandchildren may not be as grand as imagined is that the rising costs of health care and long-term care have taken a significant bite out of the retirement funds of many older Americans. These unexpected costs coupled with the prolonged low-interest rate environment have forced many boomers to dip into their retirement savings years earlier than they had intended.
In addition, larger numbers of Boomers are also now having to become caretakers for their elderly parents. This caregiving role requires both time and financial resources, further eroding the retirement funds of Boomers and limiting the amount of wealth that they can ultimately transfer to their heirs.
On top of this, the outbreak of the coronavirus pandemic has had an immense impact on baby boomers, forcing many to take extreme fiscal measures to survive. According to a survey by the Nationwide Retirement Institute, around 34% of pre-retired Baby Boomers had to dip into their future Social Security benefits due to the pandemic. As a result, even less wealth that can realistically be passed down from Baby Boomers to their children.
Finally, many Boomers are also committing much of their resources to their own retirement funds. With more opportunities than ever before to save for retirement, older individuals are concerning themselves with doing everything that they can to ensure a secure financial future for themselves. As opposed to how past generations handled retirement, the focus for Boomers is to make sure that they are taken care of first and then consider passing on any remaining resources to their families.
Therefore, despite all the talk about a large wealth transfer from Boomers to their families, it appears that this transfer may not end up as large as anticipated. The reasons why this could be the case, ranging from rising health care costs to the pandemic, show that there are a variety of obstacles that can get in the way of families being able to truly benefit from the wealth accumulated by Boomers.
As older generations approach retirement age, the potential for a large wealth transfer from Baby Boomers to their heirs has become a topic of interest and discussion. However, despite all the talk, the actual wealth transfer may not reach the heights that many anticipate.
One of the primary reasons why the expected transfer of wealth from Boomers to their children and grandchildren may not be as grand as imagined is that the rising costs of health care and long-term care have taken a significant bite out of the retirement funds of many older Americans. These unexpected costs coupled with the prolonged low-interest rate environment have forced many boomers to dip into their retirement savings years earlier than they had intended.
In addition, larger numbers of Boomers are also now having to become caretakers for their elderly parents. This caregiving role requires both time and financial resources, further eroding the retirement funds of Boomers and limiting the amount of wealth that they can ultimately transfer to their heirs.
On top of this, the outbreak of the coronavirus pandemic has had an immense impact on baby boomers, forcing many to take extreme fiscal measures to survive. According to a survey by the Nationwide Retirement Institute, around 34% of pre-retired Baby Boomers had to dip into their future Social Security benefits due to the pandemic. As a result, even less wealth that can realistically be passed down from Baby Boomers to their children.
Finally, many Boomers are also committing much of their resources to their own retirement funds. With more opportunities than ever before to save for retirement, older individuals are concerning themselves with doing everything that they can to ensure a secure financial future for themselves. As opposed to how past generations handled retirement, the focus for Boomers is to make sure that they are taken care of first and then consider passing on any remaining resources to their families.
Therefore, despite all the talk about a large wealth transfer from Boomers to their families, it appears that this transfer may not end up as large as anticipated. The reasons why this could be the case, ranging from rising health care costs to the pandemic, show that there are a variety of obstacles that can get in the way of families being able to truly benefit from the wealth accumulated by Boomers.
