Americans age 70 and older hold a record-high 30% of the country’s wealth, even though they account for about 10% of the population.
Meanwhile, recent inflation and rising costs have moved the American dream out of reach for many young adults.
Boomers are sitting on an estimated $124 trillion, most of which they will eventually transfer to future generations. Meanwhile, 42% of Americans under age 30 say they are barely getting by, according to a recent Harvard study. It’s a disconnect that has never felt more glaring.
Instead of waiting until you die to transfer those dollars to children and grandchildren, retirees should prioritize making gifts now.
Americans of average health in their mid-70s have a life expectancy somewhere between 85 and 90. If they avoid gifting for the next 10 to 15 years, that means their kids will likely be in their 60s when they receive any inheritance.
Most people in their 60s have already cleared (or failed to clear) many of life’s most difficult financial obstacles: buying a home, paying off college loans, raising and supporting young children. The impact of receiving money in one’s 20s and 30s is far greater than receiving money near your retirement age.
Many couples have concerns about gifting money during their retirement years because they don’t want to run out of money, especially if a major health event occurs. Make no mistake, retirees should first make sure their finances are secure before deciding to initiate major financial gifts. Working with an expert to properly stress-test retirement portfolios is an essential first step to remove the anxiety that could accompany gifting.
Other common objections include the fear of spoiling children, concerns your kids might spend frivolously or the idea that receiving cash gifts might lead those on the receiving end to become more dependent on annual transfers. Retirees who feel strongly about those objections should consider targeted gifting.
