What Every Generation Needs To Know About the Great Wealth Transfer, According to George Kamel
Written by
Kristopher Kane
Edited by
Amber Barkley
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
You may have heard about the impending “Great Wealth Transfer,” and you may even know that it’s historically been a landmark event for every generation, when an older generation passes on their wealth. But what don’t you know?
In a recent YouTube video, George Kamel, financial guru and “Ramsey Show” personality, provided some useful insights into this monetary movement. In the video, Kamel reveals one of the big reasons this wealth transfer is so significant.
Understanding the Great Wealth Transfer
Millennials have had many superlatives assigned to them, but you may not think of them as the most affluent demographic — yet. According to Kamel, millennials are expected to become the wealthiest generation in American history, not just through their own financial maneuvers but also due to wealthy boomer parents bequeathing massive estates.
This shift highlights how boomers benefited from favorable economic conditions like low home prices in the 1980s and a booming stock market. While millennials are at the forefront, set to receive up to $2.5 trillion annually by 2045, both older sibling Generation X and younger Generation Z are also in line for significant inheritances — for Gen X, this includes from $1 trillion to $1.5 trillion annually through the mid-2040s.
What To Do With Inherited Wealth
With a great inheritance comes great responsibility. Kamel’s solid advice to those who expect to inherit significant amounts of wealth is to have a plan in place before the money arrives. The key is to approach this newfound wealth with caution and respect.
Losing a loved one is a tumultuous experience, so it’s usually not the best time to make significant financial decisions. Instead, Kamel said it might be wise to temporarily park the inheritance in a high-yield savings account, allowing for thoughtful financial planning after you’ve processed some of your grief.
Once you’ve dealt with your loss and are ready to make decisions, Kamel said you should prioritize allocating funds in three categories: give, save and spend — in that order.
Charitable donations can honor the benefactor’s memory, and savings can help build a strong personal financial foundation, from your emergency fund to retirement accounts to your kids’ college funds. Some good expenditures to consider with inherited wealth include paying off debt and your mortgage.
Planning for Future Generations
If you’re a boomer thinking about the effect you want to have after you’re gone, Kamel pointed out that creating a legacy means more than just handing down your money. Instead, it’s about instilling values you find important and planning for the future of those you leave behind.
To make sure the personal wealth you bequeath to your survivors has a positive impact, you have to be proactive about estate planning. Leaving a will with clear instructions on asset distribution can prevent misunderstandings and conflicts among your family, which can go a long way toward minimizing financial complications.
Kamel emphasized the importance of communicating these plans with your family members. Start the conversation about your legacy and financial goals early on. Talk about how your wealth should reflect your family’s values and the importance of ambition, drive and gratitude.
During these discussions, looping in a financial advisor is a great idea as well. This can help make sure that any subsequent wealth transfer aligns with both the benefactor’s wishes and the long-term well-being of their beneficiaries.
More From GOBankingRates
