A growing number of Americans are avoiding discussions about wealth, finds new research today from Edward Jones and NEXT360 Partners.
According to the findings, 35% of survey respondents do not plan on discussing the transfer of wealth with their families. It’s an especially concerning figure as Baby Boomers and the Silent Generation are estimated to pass down a combined $84.4 trillion in assets through 2045, reports Edward Jones.
“We know it can be extremely uncomfortable and nearly impossible to separate emotions from the financial decisions necessary when planning inheritance and wealth transfer, particularly as givers navigate family priorities beyond finances,” said Lena Haas, Head of Wealth Management Advice and Solutions at Edward Jones. “However, the wealth transfer is well underway, so it’s more important than ever to connect as a family, with the expert guidance of a financial professional to help navigate the emotions and educate on the process.”
Despite shying away from conversations about wealth, findings show that Americans are more inclined to discuss their retirement and personal savings. Among those who have or plan to discuss generational wealth with their family, 40% have already talked about saving for retirement and 36% have had discussions about managing personal finances.
Different sides to generational wealth
Edward Jones and NEXT360 Partners divides its research into four scenarios of what generational wealth may look like for different families. This included:
- Traditional Giving, where older adults pass their wealth to children through a mix of assets, cash, equities, and real estate. As people live longer and spend more, younger generations want to make sure their parents have enough, while older generations acknowledge the importance of starting the conversation early with their children.
- Giving While Living.Rather than passing along a traditional inheritance, older adults instead support their loved ones by buying family experiences, contributing to education, or purchasing homes. This could leave Millennials and Gen Z unsure if there will be anything left for their inheritance, or if they may have to financially contribute to their parents’ retirement costs, the research states.
- Generational Skip, where older adults forgo giving a traditional inheritance to adult children, instead giving wealth to their grandchildren for things like education and future security – with 25% of grandparents noting that their grandchildren will be better stewards of their wealth.
- No Inheritance, as living longer may mean many families are spending down their assets to pay for the additional years of life that were previously unanticipated. For others, health-related and long-term care expenses may have drained a lifetime of savings, leaving little to no inheritance, the findings show.
Ultimately, the research notes that engaging with a financial professional can facilitate discussions around wealth transfers, especially as over half (57%) of Americans believe an advisor could guide and inform family discussions around generational wealth.
“‘The Talk’ must happen before ‘The Transfer,’” said Joe Coughlin, PhD, senior advisor to NEXT360 Partners. “Our research found that there are a lot of assumptions about inheritance, but limited effort to clarify through a discussion. ‘The Talk’ is critical to manage family harmony, uncertainty, and the financial complexity of passing wealth.”
Edward Jones, in partnership with Morning Consult and NEXT360 Partners, LLC, conducted the research with a U.S. national sample of 2,202 adults.
SEE ALSO:
- Feeling Wealthy Continues to Elude Even the Wealthy
- The Very Real Fears of Retirees and Pre-Retirees: Running Out of Money
- Here’s How Much American Workers Expect to Retire Comfortably With
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
