The Great Wealth Transfer is underway, and its impact will likely be monumental. Over the next three decades, an estimated $84.4 trillion will flow from the Silent Generation (individuals born from 1928 to 1945) and Baby Boomers (born 1946 to 1964) to their heirs and charitable causes.
This event is particularly significant for Generation X, who stand to inherit approximately $30 trillion, making them the largest beneficiaries of this historic wealth transfer. As CFP® professionals in Washington, DC, we are helping many Gen Xers plan for their financial future based on some form of inheritance.
So, what does this mean for you as a Gen Xer who is already navigating the complexities of raising families, supporting aging parents, and catching up on retirement savings? Ask yourself this: Are you prepared to manage a significant amount of inherited wealth?
The Gen X Profile: Challenges and Opportunities
Generation X, born between 1965 and 1980, occupies a unique financial position. Sandwiched between aging parents and adult children, many Gen Xers are juggling their families’ expenses while saving for retirement. Many Gen Xers care about aligning their investments with their values, while also looking for ways to invest in a tax efficient manner and create a lasting legacy for their family.
How the Wealth Will Be Transferred
The assets being passed down will come in various forms, such as cash, equities, real estate, businesses, and other assets.
The Great Wealth Transfer is poised to have far-reaching effects on the broader economy. As new wealth enters the hands of Gen X, Millennials, and Gen Z, it’s likely to drive growth in key areas such as:
- Real Estate: More individuals may purchase second homes or upgrade their living situations, fueling activity in the housing market.
- Entrepreneurship: New businesses and innovations could emerge based on their greater access to capital.
- Education: Heirs may prioritize funding core and advanced education for themselves and their families.
- Investments: New wealth will likely be funneled into equities, private investments, and alternative assets, reshaping market dynamics.
How Gen X Can Prepare for the Inheritance Boom
Here are some practical steps to consider:
- Family Communication:
Have an open and honest conversation with your parents and family about their estate plan and financial intentions. Understanding their wealth transfer strategy—including any trusts, wills, tax implications, or charitable giving plans—can help you make informed decisions about managing your future inheritance.
- Partner with a Financial Advisor:
A trusted fiduciary financial advisor in Washington, DC, can help you create a wealth management strategy tailored to your current circumstances, concerns, and future goals. Look for an advisor who prioritizes transparency, so you know you are selecting the right firm. The advisor’s recommendations should also be aligned with your values.
- Focus on Tax Efficiency:
Taxes can significantly impact your wealth, especially when dealing with intergenerational inheritances. Strategies like Roth IRA conversions, charitable giving, or making current gifts of assets to family members can help minimize your tax liabilities.
- Plan for Longevity:
With advancements in healthcare and healthier lifestyles, retirement could last 30 years or more for one or both spouses. Whether considering early retirement or a second-act career, ensure your plan allows for short-, intermediate-, and long-term financial needs.
- Protect Your Legacy:
Now is the perfect time to consider how you will pass down your own wealth to the next generation. Creating a trust or updating a will can ensure your assets are distributed according to your wishes while minimizing taxes and avoiding probate complications. Taking proactive steps now can help turn an inheritance into a lasting impact.
Why Consider Brown|Miller?
As a Gen Xer anticipating an inheritance, partnering with Brown|Miller Wealth Management now could be a prudent decision.
We specialize in multigenerational financial planning, which is particularly relevant as you consider integrating this sudden wealth into planning for current and future generations of your family. Our team of Washington, DC CFP® professionals uses their decades of experience creating custom wealth management solutions for families that help them navigate the complexities of inheritance, from tax implications to charitable giving to investment strategies, ensuring your wealth is preserved and distributed the way you want.
We use a holistic 3D wealth management process—Discover, Design, Deliver—where we first understand your unique financial situation before designing a tailored plan that aligns with your goals. This process is ideal for someone like you who is looking at immediate needs and getting prepared for 30 or more years of retirement.
If you’re part of Gen X, now is the time to take stock of your financial goals, evaluate your options, and partner with professionals who can help you confidently navigate the complexities of this massive wealth transfer. Reach out today to schedule an introductory call.
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