Millennials are on the brink of becoming the wealthiest generation in history, as estimates suggest a substantial $90 trillion wealth transfer over the next two decades will place them in a financially advantageous position. The reins of wealth are set to be handed over from the silent generation and baby boomers to millennials, who were born between 1981 and 1996. This impending transfer raises questions about how prepared millennials are to handle such a significant influx of income.
According to Salvatore Buscemi, co-founder of Brahmin Partners, millennials are inadequately prepared to manage the wealth they are poised to inherit. He highlights the lack of necessary skill sets among millennials, particularly in terms of entrepreneurship and investment. The concern lies in whether millennials will be motivated to acquire these skills later in life, given that human nature tends to make individuals less inclined to learn new skills as they age.
Although millennials experienced the global financial crisis in 2008, they are seen as being more removed from the financial hardships faced by previous generations. The aftermath of World War II greatly influenced their parents’ attitudes towards money, shaping a mindset that differs from that of millennials. Research indicates that millennials are more likely to live paycheck to paycheck, as they find themselves in the position of supporting both aging parents and their own children.
A distinction is drawn between individuals who earn wealth and those who inherit it. Those who have earned their wealth tend to possess a strong internal locus of control, feeling confident in their abilities to cope with wealth management and potential loss. Conversely, individuals who inherit wealth are more likely to feel insecure, lacking the belief in their own capabilities to navigate the challenges of managing significant assets.
As millennials stand on the brink of becoming the wealthiest generation in history, the challenges of managing inherited wealth are brought to the forefront. The need for acquiring essential skill sets, developing a long-term financial mindset, and overcoming inherited wealth insecurities are key factors that millennials must address. The impending wealth transfer presents an opportunity for millennials to redefine their financial attitudes and behaviors, ultimately shaping their ability to navigate the complexities of substantial wealth in the future.