Missing Out on the Generational Wealth Transfer: Nearly Half of Americans Don’t Expect To Inherit Anything
Written by
Athena Valentine Lent
Edited by
Ashleigh Ray
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Generational wealth is investments and assets that can be passed down from generation to generation which can be key in continually growing the family’s wealth.
When a parent passes away and leaves a house to their child as inheritance, that’s considered a generational wealth transfer. Their child (the next generation) receives this house to do with as they wish, hence passing on their wealth.
But what happens when you don’t expect anything? According to a new survey by GOBankingRates, nearly 50% of respondents don’t.
Experts Aren’t Surprised
“The data isn’t surprising compared to the current statistics on how wealth is distributed in the United States,” explains Edna Forero, ChFC, AFC.
A study published in 2019 by the Fed Board found that the median wealth families can expect from a generational transfer varied by race and ethnicity, prompting the phrase, “racial wealth gap.” Most minority families, specifically Black and Hispanic families according to the study, aren’t expecting a wealth transfer because of it.
Kevin L. Matthews II, the founder of BuildingBread, a wealth education company, also isn’t surprised that it was mostly those identifying as female between the ages of 35-64 that responded this way. The women’s pay gap isn’t new, but it’s even more impactful when it comes to building generational wealth.
“Black women, at the current rate, will not reach pay equity until 2119,” he said, “more than 60 years after the year white women are expected to achieve pay equity in 2055.”
With such a wide pay gap even among women, it’s not hard to see why some Americans have a hard time building (and maintaining) wealth, leaving the next generation with little to inherit.
The Cost of Living Is Making It Harder To Save
As the consumer price index grows, inflation rises which can really hurt one’s savings ability. With an increase in groceries and other consumables, along with the rising cost of living, it’s been a lot harder for families to get by and save for the future.
It’s much easier to save when you have something left over at the end of the month instead of constantly needing more and more to get by.
Matthews also added, “Millions of Americans are behind on their retirement savings goals. It is hard to leave something behind if you are concerned about caring for yourself.”
You Can Still Create Generational Wealth
Even though generational wealth transfers are shrinking, you can still start to build generational wealth on your own to pass down to the next generation.
First, make sure you’re covering your basics. Create a budget to see if your income is covering your current expenses and see if there’s anything you can cut back on.
Foreno also encourages you to find ways to earn additional income. For example, you can earn passive income through real estate or create a product that can be sold for a repeat profit.
But the real key, Matthews states, is investing. “This will put you on a different trajectory. [Start] to invest as early as possible, both for yourself and the next generation.”
He also reminds us that wealth building is a function of time and cannot be done overnight. But, “the sooner you start, the easier it is to build.”
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