Millennials and Gen Z expect an inheritance from their parents, but they might not get one

The much-discussed “Great Wealth Transfer” is expected to reshape the financial landscape for younger generations. Baby boomers and the silent generation are projected to pass down up to $84 trillion in assets over the next 20 years, according to a report from financial consulting firm Cerulli Associates. Of that amount, $72.6 trillion is likely to be inherited by their children, while $11.9 trillion will benefit charities. The annual Wealth Report by Knight Frank, an independent real estate consultant, stated that this transfer of wealth could make millennials “the richest generation in history.” The exact impact of this wealth shift on millennials and Gen Z remains to be seen. However, a 2024 study suggests that many members of the younger generation may receive smaller inheritances than they expect.

Study highlights generational expectations

Northwestern Mutual’s 2024 Planning & Progress Study, an annual research series, conducted online interviews with 4,588 individuals aged 18 and older. The study found that while 32% of millennials and 38% of Gen Z expect to receive an inheritance, only 22% of Gen X and baby boomers say they plan to leave one. Although 35% of boomers said leaving something for the next generation was very important, only 11% indicated it was their top financial goal. Meanwhile, roughly half of millennials and Gen Z view inheritance as crucial to their long-term financial security, with 59% of millennials and 54% of Gen Z emphasizing its importance.

The financial burden of retirement

Opinions on inheritance vary, with older generations believing they have done enough for their children, while younger generations feel their parents had an easier path to financial success, per USA Today. “A lot of older people are basically saying ‘I’ve done my due,’” Melissa Cox, a certified financial planner told USA Today. “They had to work their tuchus off for what they have. I’ve heard people basically saying, ‘I don’t want your financial plan to be my death.’” Monica Dwyer, also a certified financial planner, noted the frustration younger people have toward their current financial prospects compared to older generations. “There’s this group of younger people who are sort of aggravated with the boomers − about how easy the boomers had it,” she said. As older generations face health issues and rising care costs, much of their savings may go toward medical expenses and retirement facilities, rather than being passed down. According to USA Today, a 2022 Survey of Consumer Finances found that the average retiree between the ages of 65 and 74 had around $200,000 saved — a sum that may not be enough to cover both medical costs and leave an inheritance. “Nobody knows when they are going to die, and the idea of running out of money is rightfully terrifying to most people,” Jonathan Swanburg, a certified financial planner, said.