Millennials on the Brink of Historic Wealth as $90 Trillion Transfer Looms
While many millennials currently face challenges in achieving traditional American Dreams like homeownership and financial stability, a massive $90 trillion wealth transfer is set to reshape their fortunes. Over the next two decades, millennials stand to inherit unprecedented assets, potentially propelling them to become the wealthiest generation in history. However, this transfer may predominantly benefit those from affluent backgrounds, exacerbating existing wealth disparities.
Many millennials are currently feeling frustrated as they struggle to achieve traditional American Dreams such as owning a home, finding a stable job, and affording the cost of living. However, over the next twenty years, Millennials have the potential to inherit around $90 trillion of assets, making them the wealthiest generation in history. Unfortunately, this wealth transfer is likely to benefit only those who already come from affluent families, which could worsen wealth inequality even further.
According to The Wealth Report by global property consultant Knight Frank, between now and 2044 in the US, the Silent Generation and Baby Boomers are expected to pass on their substantial wealth to Millennials.
Receiving a wealth transfer as a Millennial is mostly based on luck, depending on the family you were born into. This shift in wealth primarily comes from inheritances passed down from previous generations, often involving properties and other assets. According to Liam Bailey, the global head of research at Knight Frank, this transfer of wealth will lead to significant changes in how wealth is utilized.
The research also showed that affluent young people are less likely to see property or real estate as a way to build wealth in the future.
MIAMI, FLORIDA - MAY 10: In an aerial view, single family homes are shown in a residential neighborhood on May 10, 2022 in Miami, Florida. New published data has hinted at improvement in the supply of homes for sale as April's numbers show inventory down 12 percent from the same month last year, the smallests yearly decline since the end of 2019. (Photo by Joe Raedle/Getty Images)
In Miami, Florida, a recent aerial view shows single family homes in a residential neighborhood. The latest data suggests a positive trend in the supply of homes for sale, with inventory down 12 percent in April compared to the same month last year. This marks the smallest yearly decline since the end of 2019.
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According to a report by Mike Pickett, director of Cazenove Capital, the low interest rate environment and rapid growth in house prices seen in the last 15 years are unlikely to be repeated in the next 15. Pickett mentioned that there is a shift in preferences among the younger generation, Gen Z, who may be more inclined towards renting homes, leasing vehicles, and adopting a subscription-based lifestyle compared to previous generations.
Moreover, Pickett pointed out that not only will wealth be passed down to these younger individuals, but there are also new methods emerging to accumulate wealth.
Wealth revival in 2023
"It's not just about moving around money," according to Pickett. He believes that the ways to generate wealth have expanded, pointing out how YouTubers can now be worth millions. The trend of first-time wealth creation is increasing, along with a variety of entrepreneurial paths to achieve it.
The report showed that in the past year, more people saw an increase in their wealth. Specifically, there was a significant rise in the number of super-wealthy individuals, which completely reversed the decrease seen in the previous year.
According to the report, the count of ultra-high-net-worth individuals, who are described as those with a net worth of $30 million or higher, increased by 4.3% in 2023 compared to the previous year. Globally, there were 626,619 people who fell into this category.
North America had the largest increase in the number of ultra-wealthy individuals, growing by 7.2% from the previous year. The Middle East followed with a 6.2% increase, and Africa saw a 3.8% rise. However, Latin America was the only region where the population of ultra-wealthy individuals decreased, by 3.6% compared to last year.
Bailey mentioned that the positive interest rate outlook, strong performance of the US economy, and a significant increase in equity markets contributed to wealth creation on a global scale.
The report revealed that a group of extremely wealthy individuals find property to be an attractive investment. Approximately 19% of this group intends to invest in commercial real estate this year, with another 22% planning to purchase residential property.
Looking towards the future, the report predicts a 28% increase in the number of super wealthy individuals over the next five years. This growth rate is slower compared to the 44% increase seen in the previous five-year period ending in 2023.
More growth in ultra-high-net-worth individuals is expected in Asia, including India, China, Malaysia and Indonesia, the report said.
Editor's P/S:
The article highlights the complex and evolving nature of wealth distribution in the United States. While Millennials face significant financial challenges, they are also poised to inherit a vast amount of wealth from previous generations. However, this transfer is likely to exacerbate existing wealth inequality, with affluent families benefiting disproportionately.
The article also suggests a shift in attitudes towards wealth accumulation, with younger generations less likely to view traditional assets like real estate as a primary means of building wealth. This trend, combined with the emergence of new wealth creation methods, could reshape the financial landscape in the years to come. It remains to be seen how this ongoing transformation will impact the overall distribution of wealth and the economic well-being of different generations in the future.
