Millennials Face Staggering Taxes on Wealth Transfer

Baby boomers, aged 62-80, possess an estimated $93 trillion in assets, a sum significantly larger than the combined wealth of Gen X and millennials. This wealth is approximately three times the GDP of the United States in 2025. However, a report from Visa Business and Economic Insights indicates that a substantial portion of this wealth will not be inherited by future generations. Over the next 20 years, only an estimated $36 trillion, or slightly more than one-third of the Baby boomer wealth, is projected to be transferred to their Gen X and millennial heirs. This amount equates to approximately $515,000 per inheriting household.

The reduction in inheritable wealth is attributed to several factors, including over $4 trillion in debt, charitable donations by the top 1%, significant retirement costs, and taxes and fees. Notably, many older homeowners are still carrying mortgage debt, with 41% of those aged 65 to 79 and 31% of those aged 80 and older still owing money. Additional debt includes credit cards, auto loans, loans against investment portfolios, and personal and business loans. These financial obligations substantially diminish the total wealth available for inheritance.

Visa estimates that out of the $36 trillion that will be passed down, $28 trillion is likely to be allocated to savings and investments, including property. The remaining $8 trillion is what future generations are expected to spend. While $8 trillion is a considerable sum, it represents the disposable portion of the inheritance. According to Visa, this inherited spending money will primarily be directed towards major purchases such as housing, including home purchases or down payments, and automobiles.