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The much-anticipated Great Wealth Transfer has sparked hope that Baby Boomers’ wealth will secure the financial futures of their Gen X and Millennial children. However, while an estimated $84 trillion is projected to transfer by 2045, much of it is concentrated among the ultra-wealthy, leaving a limited inheritance for Gen X.
High living costs, extended retirement years, and competing financial obligations mean Gen X cannot rely on inheritance alone for retirement security.
Key Takeaways
- While $84 trillion is projected to transfer by 2045, much of this wealth is concentrated among the ultra-wealthy, leaving Gen X with less than expected.
- With high living costs and extended retirement years, Gen X cannot rely only on inheritance for retirement security and must prioritize saving, reducing debt, and planning for healthcare costs.
- Gen X is in their peak earning years, which is an optimal time to maximize retirement account contributions and focus on financial independence.
- Engaging in open discussions with Boomer parents about inheritance expectations and long-term care plans helps avoid financial surprises.
The Reality of Wealth Transfer for Gen X
Gen X is often overlooked in wealth transfer conversations. While Boomers benefited from Silent Generation wealth and Millennials have time to build financial security, Gen X faces an urgent need for retirement planning.
A Cerulli Associates study reveals that a large share of wealth transfers will go to the ultra-wealthy, not average families. Additionally, healthcare costs threaten to reduce inheritances as Boomers deplete assets for medical expenses. Even for those expecting an inheritance, the timing may not align with Gen X’s retirement needs. Thus, Gen Xers must plan independently.
What I’m Telling My Clients
Leverage Peak Earning Years for Retirement Security
Gen X is in its peak earning years, providing a crucial opportunity to prioritize retirement savings. By maximizing contributions to retirement accounts, reducing debt, and planning for healthcare costs, Gen X can establish financial security.
Gen Xers should define their “freedom number”—the amount needed to sustain their desired retirement lifestyle—and take proactive financial steps now rather than relying on uncertain inheritances. A typical retirement savings rate ranges from 10% to 20% of income, depending on one’s stage in life. For those anxious about retirement readiness, increasing this rate from 20% to 30% can provide greater confidence.
Warning
The Federal Reserve Bank of Economic Data reports those aged 55-64 spend an average of $83,000 annually, highlighting the high cost of living in retirement.
The Role of Cross-Generational Conversations
Gen X must initiate honest conversations with Boomer parents to align expectations about inheritance and long-term care plans. Understanding financial realities allows Gen X to make informed decisions and avoid unexpected financial gaps.
The Bottom Line
The Great Wealth Transfer won’t solve Gen X’s retirement challenges. Instead, Gen X should view inheritance as a bonus, not a lifeline. A proactive approach—focused on savings, strategic planning, and financial independence—will ensure Gen Xers retire confidently, regardless of how much wealth is passed down.
