The traditional cycle of wealth transfer in America has always seen older generations safeguarding assets in order to leave as much as possible for future generations. However, a recent article from CNBC points out that a recent survey indicates that the trend of leaving as much as possible for the next generation via large inheritances may be dying out. This means every individual’s approach to comprehensive estate planning needs to be more versatile and dynamic as changing priorities start to take hold.
Baby Boomer Priorities
The article draws from a recent survey conducted by PNC Financial Services Group. The popular bank recently surveyed 492 individuals ranging in age from 25 to 75. The requirement for participation was that each individual needed $50,000 in assets capable of being invested exclusive of their workplace retirement plans. The survey found that with respondents between the ages of 65 and 75, only three out of every ten individuals falling into this age range ranked leaving assets to a loved one as a top life goal. Instead, many respondents in this age range
Individuals involved in the survey or in interpreting its results indicate that this demonstrates those in this age range are not necessarily as concerned with leaving money to loved ones as past generations may have been. Spending habits among this age group seem to indicate that they are more interested in ensuring that they can enjoy their money now as opposed to planning in ways that allow heirs to enjoy those assets later.
According to survey responses, most individuals in this age group ranked having peace of mind as their most important financial goal with nearly half of respondents rating this as most important. Coming in second with 46 percent of respondents indicating it was important was enjoying life. A close third in the survey was traveling somewhere. Only 27 percent of respondents indicated that leaving money for a loved one was one of their top priorities when it comes to financial planning and estate planning.
While the survey does not necessarily mean baby boomers do not look at estate planning with their heirs in mind, it could be a warning to individuals of all ages that they might not be able to rely on a large inheritance for their own financial security and well-being. That could have a significant impact on how younger generations approach financial planning and even in how they approach estate planning. It is possible that lower wealth transfer rates to current generations will have repercussions for future generations, too – though just how much of an impact the sentiment behind this survey may have remains to be seen.