Did you know that we are experiencing the greatest wealth transfer in history? Over the next two decades, 68 trillion dollars will pass from the Baby Boomer generation to the Gen X and Millennial generations. But before we discuss how you can prepare for this historic change in the economy, let’s chat about why this wealth transfer is so extraordinary.
The Boomer generation is the first recorded generation in America to do better financially than their children’s generation. As young adults, boomers entered a thriving economy with plentiful housing. Taxes kept university tuition low, so student debt was hardly the epidemic it is today. Labor protections ensured that most high school graduates could buy homes on an hourly salary.
According to CNBC, boomers hold 53% of all wealth and assets in the United States economy. By contrast, their children (the millennial generation) hold under 5 percent. (When boomers were the same age as millennials, they had already accumulated about 21% of the nation’s wealth.)
So, whether or not you’re giving or receiving an inheritance, knowing how to prepare for the great wealth transfer is beneficial. Check out these four tips to maximize this unique moment in history.
How to Prepare for The Great Wealth Transfer: 4 Tips
1. Talk to your family about finances.
Research shows that 90% of generational wealth is lost by the third generation. Why? People pass down money without having the hard conversations. They give their kids assets without explaining how to manage them.
If you are passing down wealth:
- Invest in your beneficiaries’ financial education
- Explain the assets you’re giving them
- Pass on a biblical view of wealth
If you may be receiving wealth:
- Understand the economic situation
- Ask good questions
- Gain financial knowledge, which brings us to point #2:
2. Understand investment opportunities: Focus on cash flow and reinvest.
Learning how to create and keep passive income is the key to building wealth. Rather than trying to become a jack of all trades, pick a few passive income strategies to master. Here are a few ways you can put your money to work for you:
- Real estate (understanding real estate cycles is critical here)
- Business (but be careful that you’re not just creating another job for yourself)
- Dividend stocks (these pay you monthly, quarterly, or annually)
- Digital courses and affiliate marketing
You should invest with great care and expect your investments to cash flow. Save automatically, but invest intentionally. Don’t spend your passive income if you want to keep the generational wealth ball rolling. Reinvest it.
3. Entrepreneurs, prepare to pivot.
If you’re an entrepreneur, it could be helpful to start studying marketing trends for Gen X and Millennials. How will you make your products and services attractive to the customer segment that has the most buying power? Prepare to pivot portions of your business if necessary.
For real estate investors, the great wealth transfer might mean a greater supply of single-family homes in the near future. Fannie Mae estimates that single-family homes for sale will increase to 10.5M – 11.9M by 2026. If you’re receiving any inheritance in the form of cash or real estate, now is the time to understand how to invest in real estate. It’s a great, tax-advantaged investment to preserve and build wealth!
4. Prioritize a Kingdom Impact
You can be a part of the wealth transfer even if you’re not giving or receiving an inheritance. Proverbs 13:22 (NIV) says, “A good person leaves an inheritance for their children’s children, but a sinner’s wealth is stored up for the righteous.”
At WealthBuilders, we believe this wealth transfer has a spiritual component, too. God is transferring the wealth of sinners to the righteous in order to fulfill His plans and purposes in the earth. Here’s how to prepare for the great wealth transfer by prioritizing a Kingdom impact:
- Gain knowledge, understanding, and wisdom about financial matters. Then, you’ll attract money to your life and know how to steward it once you receive it.
- Choose investment vehicles that make a Kingdom impact. You don’t have to invest your money into “woke” companies that oppose Christian values. Instead, you can literally transfer your money into the hands of the righteous by choosing biblically responsible, Pro-Values, and/or Kingdom impact investments.
- Give. When you donate to your church or a nonprofit like WealthBuilders, you are playing an active role in the divine wealth transfer. Our WealthBuilders Legacy Partners provide free, faith-based financial education around the world. To become a legacy partner today, click here.
We hope this blog post taught you how to prepare for the great wealth transfer! Any questions or additional tips? We’d love to hear your thoughts in the comment section below!
Always great and iam grateful