Over the next quarter-century, the US is set to witness the largest transfer of wealth in its history, CNBC reports.
According to a report by Cerulli Associates, an estimated $124 trillion is projected to be passed down to family members and charities by 2048, with significant economic and social implications.
Dubbed the “Great Wealth Transfer,” this unprecedented redistribution of wealth reflects the growing concentration of assets among older generations. Approximately $106 trillion is expected to go to family members and heirs, while $18 trillion will benefit charitable causes. The wealthiest 2% of Americans, with net worths exceeding $5 million, will account for $62 trillion of the total transfer.
Currently, around $2.5 trillion is being transferred annually to heirs and spouses. This annual figure is projected to rise steadily, reaching $5 trillion by 2048. Driving this surge are demographic trends, including aging baby boomers and increasing asset values.
This transfer marks a transformation in the landscape of wealth. More women, millennials, and Gen Zers will join the ranks of the affluent, diversifying the demographic profile of wealth holders. Women, in particular, will inherit $54 trillion, largely through “horizontal transfers” from spouses.
Generation X stands to benefit the most in the near term, inheriting $14 trillion by 2034 and $39 trillion by 2048. Millennials are poised to inherit $46 trillion over the next 25 years, followed by Gen Z, set to receive $15 trillion.
Cerulli’s updated estimates, which reflect a 50% increase from its 2021 projection of $84 trillion, highlight the influence of inflation, rising asset values, and wealth concentration. Between 2020 and 2023, the share of wealth held by individuals worth $10 million or more rose from 40% to 44%, while those aged 60 or older saw their wealth share increase from 54% to 61%.
The impending wealth transfer has significant implications for financial planning, philanthropy, and consumer markets. Wealth management firms are adapting by focusing on next-generation heirs and recruiting advisors who better reflect the diversity of future clients. Luxury brands and nonprofit organizations are also preparing for shifts in their client and donor bases.
In the short term, wealth advisors emphasize the importance of educating beneficiaries on financial stewardship. Over the long term, strategies must evolve to engage younger, more diverse stakeholders.
