in the coming decades, the wealthiest generation in history will die. It's an unfortunate, albeit inevitable, fact of life. But baby boomers will eventually go extinct, and they will pass down over $90 trillion to the Next Generation within America alone. This much money could fix a lot of problems like student debt, unaffordable housing, inadequate retirement savings, and record credit card debt. But don't get too excited just yet because at best, the great wealth transfer is a financial illusion, and it could actually just end up making things worse. This is a setup, a warning of the ugliness to come. The greatest wealth transfer in history is here, with familiar transfer of wealth is underway as we speak. Baby boomers are leaving an estimated $70 trillion dollar to Millennial and Gen X heirs. BB boomers are the wealthiest generation in history in America. They control half of the nation's wealth, according to the 2024 wealth report prepared by the property management company Knight Frank. Other sources estimate that baby boomers only hold a mere $78 trillion in assets.

slight difference of $12 trillion is due to what you really Define as wealth, and that slight difference in opinion is more than the collective wealth of half the planet. Regardless of the exact methodology used to calculate generational wealth, they all agree on one thing: baby boomers are the kings, and everybody else has been holding on to whatever is left over. That concentration of wealth has, according to many, come at the expense of younger Generations who are now poorer than their parents were at the same age. So that means when life finds a way and this wealth is passed down, it should fix these generational issues, right? Wrong. Counting on an inheritance to fix your own personal finances is a terrible idea. According to a survey by the investment intelligence firm nxis, 70% of young people expect to get an inheritance, but only 40% of their parents actually plan on leaving one. This means individually 30% of the young adult population is going to have their financial plans ruined late in their careers when there isn't much time left to make up for it.

okay, so waiting on an inheritance is a dumb thing to do as an individual. But counting on the great wealth transfer globally is just plain irresponsible for three simple reasons. The first is that not all wealth is created equal. $7.4 trillion of the $90 trillion total are held in private businesses, according to data from the FED. Small operations like HVAC, Roofing, Machining, mortgage brokering, medical practices, and repair businesses number in the millions across America, but putting a value on them can be extremely tricky. The FED took estimated EA for these companies, which takes the earnings of a business before interest, taxes, depreciation, and amortization, and then multiplies that by an industry standard valuation multiple. If you own a small business that makes $200,000 per year before these other costs, and you operate in an industry like Machinery with an industry EIT a multiple value of five, then congratulations, your business is worth $1 million. This is an imprecise art, and naturally a business is only worth as

much as someone is willing to pay for it, which will only cause a problem when all of these Boomer-owned businesses get passed down to the Next Generation. According to the American Medical Association, 49.1% of Physicians currently work in practices where the owner is themselves a doctor. That was down significantly since the start of the pandemic, and many of those left are owned by doctors that have had time to get the experience, clientele, and capital necessary to go into business for themselves. If they retire or die, their business doesn't have any value to their children unless they themselves are also doctors in the same field of medicine, an exceedingly rare occurrence. Millions of other owner-operator businesses will close their doors before they can be passed down to younger Generations. Now, this is a bigger problem than some trust fund babies not getting handed a free business. If these businesses disappear, it will not only take their services out of the market, it will also stop new entrance into the job market from getting apprenticeships to learn the trades that are already in

desperately short supply, but in crisis comes opportunity. The first group that is actually benefiting from the great wealth transfer are investment firms that are buying up these small firms for pennies on the dollar from owner-operators who just want a bit of extra cash before they retire. In a process called rolling up, private equity firms are buying dozens of small businesses and then merging them into one more efficient business that can hire cheaper employees to service the clients of all the old businesses. Sites like BizBuySell, BizQuest, and BusinessBroker.net have become the eBay for small businesses, largely listing businesses owned by retiring Baby Boomers who are hoping to get something rather than just shutting them down. There is one other problem with all this private business wealth too. The 50 largest private companies in America are all almost exclusively owned by Baby Boomers. Without the financials of these private companies, putting an accurate value on them is almost impossible. But based on comparables, these top 50 are collectively worth an estimated $2 trillion conservatively, so almost half of the

wealth in this asset class is just 50 companies unless your family name is Bloomberg Mars or Coke. The value of the Boomers' private companies is not something that is going to impact your life, but that's only one small part of the great wealth transfer. Boomers reportedly owned $16.9 trillion in durables and other assets, ranging from rusty old home appliances to motor yachts. Some of these goods could be sold by a beneficiary, but a lot of this paper wealth is in reality going to end up being a financial burden to maintain if it's not just simply disposed of. Rounding out the wealth that might not do much good to the next generation, pension plans have been calculated on what they are worth to the Boomers themselves, based on assessing how much money someone would need to replace that cash flow. A pension that pays out $50,000 a year to a retiree could have an on-paper future value of a million, but that doesn't mean that a beneficiary is going to receive a million dollars when

their parents die. So with that, the great wealth transfer has already been cut in half. But that still leaves $4 trillion in cash, equities, and most importantly, housing that is going to be passed down in the coming years. And that's going to fix a few things, right? Well, it's time to learn how money works to find out why the great wealth transfer probably won't change anything. This week's lesson is sponsored by Skillshare. I get asked all the time about creating content and what the most important part of being a YouTuber is. The truth is if I just put charts and research on the screen, this video would be titled Intergenerational Wealth Distribution: Analyzing the Potential Dissipation of Boomer Assets in the 21st Century. It won't draw any attention. Instead, I have to tell a story, and this course on video storytelling is an excellent starting point if you want to get started yourself. In addition to story, there are classes on how to create, edit, and shoot videos as well. Skillshare is the largest online learning community.

designed by and for creatives, offering thousands of on-demand classes across a wide range of topics taught by industry experts. With a focus on a learn-by-doing approach and the ability to progress from beginner to pro at one's own pace, Skillshare offers not only a variety of creative courses, but courses in marketing and entrepreneurship. With school out and our bosses on vacation for the summer, many of us are finding ourselves with more time on our hands. I want to learn how to use Notion this summer, so I'm going through the Notion learning path on Skillshare, and it's been great so far. Don't let this summer go to waste and start learning with Skillshare. The first 500 people to use my link in the description will receive a one-month free trial of Skillshare. Get started today. Baby boomers' second largest asset class is their homes and investment properties. The generation owns almost as much real estate as the Generation X and Millennials combined, and controlling this much of the market has caused problems for everybody else, according to

a survey conducted by the real estate firm Redfin. About half of homeowners and renters said they have periodically struggled this year to afford their mortgage payment or rent as rates have increased and have been passed along to the people on the bottom of the housing ladder. The survey also found that to keep up with payments, some homeowners and renters had resorted to selling their belongings, picking up overtime shifts, canceling vacations, working a second job, and even skipping meals to keep up with their payments. Housing has simply become a major expense for everyone except for those who have had the opportunity to purchase a home when they were affordable and the time to pay their mortgage off in full. The great wealth transfer of housing on the surface looks like a ghoulish, albeit pragmatic solution to this problem for two simple reasons. The first is that it could provide millions of people with a house of their own to live in. The second reason is that even if you receive a home as an inheritance that you don't want to live in, you can just sell it.

which is good for you and good for the market because it provides Supply at a time when almost nobody wants to sell their home. So what's the problem then? Well, again, less housing than you would expect is actually going to be passed down. A study published by the National Library of Medicine has found that a majority of Lifetime Healthcare cost for the average person happens after they turn 65. This is an immediate problem because according to a study by the health research organization kff, only half of people over 65 have anything saved to pay for healthcare cost in retirement, and the overwhelming majority of adults won't have enough money to pay for Senior Living care, which is now estimated to be over $100,000 per year. Medicare, which is the government provided health insurance program for seniors, does not support Senior Living, so many seniors will add a Medicare Advantage plan, which is an additional out-of-pocket expense. So housing will be handed down, but it's primarily going to be handed down to reverse mortgage companies or sold to cover spiraling Senior Living costs.

according to Freddy Mack, the total value of cash-out refinances and second mortgages has already doubled since 2019. As even people who do own their own home have trouble keeping up. So, so far the great wealth transfer is going to consolidate small businesses, financialized homes even further, drive up medical costs, strain government services, and increase household debt. But there is still hope. There is one asset class left, and it's the biggest of them all. Baby boomers hold on to more equities and fixed income securities like stocks and bonds than Millennials have between all of their assets combined. But when you think about it, that doesn't really make sense. For most people, their biggest asset is their home. Participation in the stock market is at record highs thanks to investment vehicles like 401ks and IRAs, as well as technologies that make investing easier like cheap online brokerages. According to the FED survey of consumer finances, 58% of households own stock in 2023, which is a good thing, but it's still lower than the 65% of

households that own their own home. Part of this can be explained by people buying stocks because they simply can't afford housing, but that's only a minor factor. This class of assets will actually be handed down in the great wealth transfer, but it doesn't belong to normal people. Despite record participation in the market, the richest 10% of Americans now own 93% of stocks. The bottom 50% of Americans own just 1%. Most shockingly of all, the stock market inequality is even more severe amongst Baby Boomers. Just Bill Gates, Jeff Bezos, Elon Musk, Steve Balmer, Larry Ellison, Michael Dell, Jensen Huang, and the three surviving Walmart heirs own roughly $1.9 trillion worth of stocks, or 10% of all the equities within their generation. The remaining 70 million baby boomers own the 90% that these 10 people have left behind. The good news for the people in line to inherit a majority of this wealth is that they won't need to wait for it. A New York Times article

Detailing the way that this wealth is being transferred has found that most of the advantages of the great wealth transfer have already been handed to the people in line to receive it. A growing trend of giving while living means that children from wealthy families with the financial means to maintain their wealth until their death are already getting their college paid for, assistance with buying their first home, and cash to cover the cost of raising their own children. According to a survey from the UK, nearly 80% of children enrolled in the country's private schools had at least part of their fees paid for by their grandparents. If you are in a financial situation where you need the great wealth transfer to help you out, the great wealth transfer probably isn't going to help you now. If you want to learn about a country that did this whole great wealth transfer in Reverse, go and watch my video about how supposedly communist China ended up with more billionaires than America. Also, remember that to get these videos a day early and to have access to free articles that will never be made into

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The Great Wealth Transfer... Won't Change Anything (probably)

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The Great Wealth Transfer... Won't Change Anything (probably)

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