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The great wealth transfer reality check

https://usa.visa.com/partner-with-us/visa-consulting-analytics/economic-insights/great-wealth-transfer-reality-check.html
33•MarcoDewey•2h ago

Comments

mikestew•1h ago
Despite TFA coming from Visa, of all places, I found it to be a read worthy of my time. Basically, inheritances might not be as large as one might suspect, and the all that "inheritance spending lift" might already be happening (my parents are blowing my inheritance).

I might take issue with the conclusion at the very bottom that GenX and Millenials are ahead of Boomers on a capital per-capita basis. That might be true, but (for example) when this youngest-of-them Boomer bought his first house, housing was much more affordable. So it's not like the "kids" are necessarily spending their money on the fabled avocado toast (a dish this Boomer enjoys very much, thank you).

skybrian•26m ago
In many places you couldn't even buy "starter houses" like they had anymore. They wouldn't meet modern building codes. When people do manage to buy a house, it will likely be a nicer one.
SoftTalker•14m ago
It may look nicer, and have more features, but it's probably not built any better. Older homes were built with copper plumbing, plaster walls, solid hardwood floors, wood trim, and plywood subfloors, roof deck, and sheathing.

New homes use PVC or PEX pipes, drywall, OSB (basically glued-up wood chips) instead of plywood, laminate floors, and plastic or styrene trim.

The only things really better today are insulation and wiring.

alephnerd•12m ago
In California, a big difference is earthquake retrofitting. Older houses often aren't retrofit until sale, and retrofitting is expensive.

Also, I've noticed newer houses (2000s-present) are airier and have more natural light compared to older (pre-90s) houses.

lisper•9m ago
Newer CA homes also tend to do better in fires.
loeg•8m ago
The new building methods and materials are genuinely better.

(Criticizing OSB and glazing plywood is crazy. They're both just composite wood products. OSB is totally fine for what it's used for.)

mae3x•26m ago
"my parents are blowing my inheritance". Really? It is their money, not yours. I think you mean, "my parents are spending down their savings."
beepboopboop•24m ago
I read that as an observation rather than commentary on who the money belongs to.
epistasis•24m ago
It is a very good read. And my only difference in option is that I think Visa of all places would be very knowledgeable about spending and where it all goes.

They have an absolutely vast amount of information about how money flows in the economy, and an interest in finding out where it will flow in the future, and when.

dsauerbrun•11m ago
They have the data but I wouldn't trust their analysis of it unless they release all the raw data which would be to the benefit of their competitors.
atleastoptimal•49m ago
80% of the GDP over the next two decades will be siphoning money out of baby boomers (medical care, retirement homes, luxury cruises) before their children see a cent of it. Coupled with AI taking everyone's job, the end result is neo-feudalism where familial dynasties call all the shots.
alephnerd•46m ago
Not all households are as dysfunctional as the ones you described.

And there's a reason why trust and wealth planning has becoming increasingly common.

And while I am optimistic about AI's capabilities and am by no means an AI Luddite, assuming AI will take all jobs in the near future is ludicrous.

cyanydeez•39m ago
I think youre confusing "defacto" job loss and "replacement" job loss.

Defacto job loss is: Your boss thinks you're replaceable with AI, and he fires you then puts the other workers implicitly responsible for your workload, _regardless of AI's capability.

Replacement job loss: AI actually does 100% of your work load.

Defacto jobloss is the insideous love child and will definitely accelerate because the "unwoke" mind virus rich people have that people are all replaceable, useless and "takers" as elon calls it. Workers will put up wiht it because they need a job under neofeudalism.

alephnerd•31m ago
And that isn't how or why layoffs are happening as someone who has made those calls.

AI is being used as a scapegoat, but a lot of this is just rightsizing if headcount as I mentioned before.

Scubabear68•24m ago
paulpauper•23m ago
Gen X and millennials are ahead of boomers on per capita wealth at the same age

This runs counter to the popular media narrative of poor millennials, but it makes sense. Millennials rose a tailwind of surging stock prices since the '09 bottom, fat white-collar salaries (such as in tech, consulting, finance), and surging home pries, buoyed by cheap mortgages from 2010-2022 thanks to 14 years of near-zero interest rates.

Even when taking into account student loan debt, white-collar workers still earn much more compared to in the 70s-early 2000s. 6 figure salaries for white-collar jobs were uncommon even in the early 2000s whereas they are commonplace today.

add-sub-mul-div•17m ago
Everything that can be done is being done to ensure that white-collar labor transitions from skilled workers to low-cost fungible operators of AI. Even if no further jobs are lost it will be a massive hit to the average salary.
nullorempty•10m ago
Let's not assume that 6 figure salary is close to 999,999. In reality it's closer to 100,001.

And when you factor in inflation and increased housing cost the comparison starts to differ greatly.

Millennials have it pretty tough.

sokoloff•3m ago
I think every generation would self-report that they had it pretty tough.

I remember my (Boomer) school teacher parents sitting at the kitchen table with an LED calculator adding up their bills and making sure they could make ends meet or getting blocks of government cheese for some reason (that made great grilled cheese, BTW).

Was it 10% easier for them than Millennials? Maybe. Was it 50% or 100% easier? I don’t think so.

KwisatzHaderack•21m ago
Ag, so it’s not really “eat the rich” but “eat the boomers”.
tonymet•20m ago
Read about revolutionaries, they really don’t care who they eat. Be prepared to be involuntarily labeled a boomer
FloorEgg•12m ago
When certain people are convinced that all wealth and success are only achieved through exploitation, then it's easy to lack empathy and consideration for anyone more wealthy or successful than them.
citizenpaul•19m ago
What is shocking to me is how can so many boomers still have a mortgage? They could buy a house when you could easily get one for <10 years of salary almost anywhere. You basically had to try not to pay off your mortgage, then constantly borrow against it.

>plant to do a Skip gen trip?

I have no earthy idea what this could mean but they just casually drop it in there. Thats how you can tell what social class you were born into.

I had a school friend whom's grandparents were one of these in the list it seems. The bought him a 3bed/bath house in the suburbs. He proceeded to do coke for the next 10 years and be a burnout,.but all good because he still has a nice house to live in while being a detriment to society. Yeah I'm bitter so what?

alephnerd•16m ago
My parents are not boomers (they're Gen X), but kept their marginal mortgage because the capital they would have used to fully pay off the mortgage could be better deployed in a mixture of investments.

A lot of households have done something similar.

Additionally, not all households bought their first house in their 20s - plenty of households did so in their 30s and 40s.

> They could buy a house when you could easily get one for <10 years of salary almost anywhere

And during that era, you had double digit interest rates [0]

[0] - https://www.statista.com/statistics/1338105/volcker-shock-in...

inigyou•12m ago
Maybe they all got houses when the monthly payments were affordable.
bluGill•9m ago
I've seen a lot of people do can put refinances instead of paying the house off. I recall one friend looked at the deed on the new house he bought (10 years ago) for 250k. The previous sale was for 90k, but we could see every refinance over the years, they owed 235k when it was sold. Probably lived a nice life in between with nice vacations but no savings.
malfist•11m ago
This whole premise is bullshit.

They include the 1% in the wealth calculation, and then exclude it from the wealth transfer to say "see how much taxation is happening?"

If you don't want to include the 1% in the second number, don't include it in the first number.

tonymet•9m ago
don’t think of it as a setback, imagine the opportunity
NoDodgeQuestion•5m ago
>baby boomers are sitting on at least $93 trillion in assets

> $36 trillion in baby boomer wealth will pass to Gen X and millennial heirs over the next 20 years after subtracting liabilities, excluding the top 1 percent of households (the outliers in how they spend their wealth)

Why the fuck would you be allowed to include top 1% in first number but not second? They are outliers, yes, so what?

"Not all households are as dysfunctional as the ones you described".

This comment of course needs to be taken in the context of HN. In the wider world, we have literal tens of millions of people in the United States who are in poverty and experience daily hunger and deprivation.

loeg•5m ago
We do not have tens of millions of hungry people unless you're including being a bit peckish before lunch time.
boringg•37m ago
Bold assessment.
jimbob45•30m ago
It’s not. If you have older parents today, you can do the math on what activities they’re doing and quickly determine that you’re never going to see a cent from them. My friends all report the same.

I may sound salty but I’m not. I’ve spent enough time on Reddit to know that the real nightmare is when your parents didn’t save anything and can’t still work. Then, you’re obligated to take care of them and they actively take away from both you and their grandchildren (if they didn’t outright block you from being able to have kids in the first place).

fHr•28m ago
not wrong
skybrian•28m ago
That kind of spending is included under "retirement spending" in the article. They estimate that substantial amounts go to heirs after that, but mostly among the affluent.
cyanregiment•24m ago
I had the same fears but even the boomers sitting on million dollar homes are being called “cash poor”.

You still need an income. You can only refinance so much, and then you’re paying off interest.

If your home 10x’s in value so does your property tax. Some people are paying $1500/mo. in property tax. They need a job just to cover it.

You can’t sell the house and cash out because you need that cash to buy the next house without having a huge monthly payment.

It’s not enough to just own assets. They have to be capitalized upon in some way - having a renter, building a farm, storage, or other business with it, and so-on.

But nobody is really doing that. I think boomers thought they would get rich off the real estate and it’s not really happening. All it did was make prices out of reach for the average person.

Super wealthy are buying homes at inflated prices which is interesting and surprising but they’re largely not boomers.

Dynasties calling shots maybe, probably. But what’s new?

cortesoft•18m ago
> If your home 10x’s in value so does your property tax.

That depends on where you live. For example, in California we have Prop 13, which limits how much the assessed value for a home can increase without being sold.

This means that even if your house goes up 10x in value, California will only increase the assessed value for tax purposes by 2% each year.

smhenderson•13m ago
It's similar where I am - a bank and a realtor might say a home is worth .5M but the tax man still assesses it at around 115K.

I bought my home over 20 years ago and it is worth much more than I paid on the market. Yet the value of the property for tax purposes is only 3K more than what I paid for it in 2002.

loeg•11m ago
> If your home 10x’s in value so does your property tax.

This isn't how property tax works in many places (assuming you're talking about supply/demand constraint reasons and not individual property development, e.g. apartment building). There is an overall assessment being raised by the entity (e.g., county), and it is divided pro rata across property owners. In this system, if everyone's property goes up 10x, the amount they pay individually stays exactly the same.

sokoloff•10m ago
> If your home 10x’s in value so does your property tax

If the entire city goes up 10x (without corresponding general inflation), you’ll likely find the tax rate goes down because most places tax property to fund government and few places would quickly swell the city budget by 10x.

SoftTalker•10m ago
> I think boomers thought they would get rich off the real estate and it’s not really happening.

It would have if they had paid off their mortgages instead of borrowing against equity, refinancing and taking equity out, etc.

If you still owe 70-80% of your house to the bank when you retire, it's not really an asset.

_doctor_love•21m ago
> the end result is neo-feudalism where familial dynasties call all the shots

I'm going to stick my neck out and say that this is mostly where we are already.

Agree that before the boomers can pass money to their children, our corporate overlords will find a way to hoover that money into their vaults.

Don't think AI will take everyone's job and is actually orthogonal to this entire issue.

inigyou•14m ago
Isn't that already happening and has happened? This news is a decade late. Last decade we could've said "in the next few years"
Jtsummers•3m ago
> >plant to do a Skip gen trip?

> I have no earthy idea what this could mean but they just casually drop it in there

It's defined in the paragraph above the image you misquoted:

> Skip-generation trips, where grandparents travel with grandchildren without their parents, are a clear example of how the wealth transfer is not just about money. These trips turn wealth into time together, shared memories and a way to pass down values across generations.

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