Is the U.S. Economy In The Midst of The Largest Wealth Transfer Ever Made?

“Various articles from wealth management advisors suggest that the U.S. is on the cusp of one of the largest wealth transfers ever to have occurred in the U.S.

The reasoning is that baby boomers are aging and will “transfer” their immense wealth to the next generations.  Whether this is correct or not, it remains that the methods of transfer of this wealth will have significant impact.  If, for example, there are major philanthropic endeavors by the baby boomer generation, that would have a different impact than, let us say, transferring wealth to grandchildren (i.e. thereby skipping one generation)

The Congressional Budget Office (CBO) produces regular reports on the state of the U.S. economy as well as 10 year and long-term projections of the nation’s budget and economic outlook. (

In its analyses, (Sept. 2009) “Will the Demand for Assets Fall When the Baby Boomers Retire?”  the CBO examines a range of developments that could have short- or longer-term consequences for the economy”…. According to the report, “In the decade to come, one such important development will be the retirement of a substantial proportion of the baby-boom generation—the segment of the nation’s population born between 1946 and 1964, whose oldest members turned 62 in 2008.”

“Although the shift in demographics caused by that group’s retirement from the work force might affect the U.S. economy in many ways, this background paper focuses on what could happen in just one area: the demand for assets, particularly financial assets, such as stocks and bonds.”…

“Some economists have warned of the possibility of a dramatic decline in demand as baby boomers sell off their assets to finance consumption in retirement…”

As part of the contents of the 2009 CBO report:

Why Are Baby Boomers Unlikely to Draw Down Assets Rapidly in Retirement?

The responses are that Baby Boomers will be:

Saving for Unexpected Events

Saving for Bequests (p. 6 of article)

Are feeling the Effects of the Financial Turmoil (p. 10 of report)

The report continues: “Several factors suggest that baby-boom retirees, like retirees in earlier groups, are not likely to draw down their assets quickly in retirement. Many will retain their assets as a buffer against high and unanticipated medical expenses and against the risk of outliving their assets. Some will preserve assets to leave as bequests.”

There is also a very interesting chart within the article indicating that the MEDIAN wealth of people 55-64 years old is $200,00 and the MEAN is a staggering $800,000 (in 2007 dollars) (see p.4 of the 33 page report)

It appears that wealth has become highly concentrated in the United States.

According data from the 2007 indicate that baby-boomer households own more than 50 percent of the value of all outstanding financial assets in the U.S. financial market. Further,  “Boomers represent 44% of the US population, and their buying power is considerable: in the next 5 years, they’re projected to hold 70% of US disposable income and buy 49% of total consumer-packaged goods (CPG). (Aug. 7, 2012 article)

In addition, apparently the baby boomer generation quickly became internet- savvy shoppers.

Boomers spend a good portion of their large disposable income over the internet, and those aged 50 and older spend nearly $7 billion per year online. They use the internet as their primary means of comparison shopping for major purchases (such as cars and home furnishings).

Other Findings of the article:

  • The Boomer generation represents more than 80 million US consumers.
  • The 50+ segment consists of close to 100 million consumers.
  • Between now and 2030, the 18-49 segment is expected to grow by 12%, while the 50+ segment will expand by 34%.
  • By 2050, there will be 161 million 50+ consumers, representing 63% growth over 2010.

Another astounding piece of data- of the wealth of the boomer generation comes from (July 22, 2014)  “Great wealth transfer will be $30 trillion…”  Yes, that is trillions of dollars!  And “the retirement account balance at the end of 2012 held at $9.5 trillion”

Thus, according to many reports, surveys, articles and statistics:  the boomer generation was a generation of savers, were able to accumulate immense wealth overall, and will be in a position to transfer the greatest amount of wealth of any prior generation.

The mechanisms of this transfer will also have an impact – will the boomer generation utilize mechanisms such as Trusts and Foundations to make those transfers, rather than outright bequests?

The trends seem to indicate, yes.


Tags: , ,

About Attorney Barbara Ann Dalvano

Attorney in Denver, Colorado with extensive practice experience in the areas of Estate Planning, Wills and Trusts, Business Succession Planning, Probate, Contract Law.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: