It's official: Rich people are relying on their rich parents
- One-third of Americans are waiting on an inheritance, according to new data from Merrill Edge.
- The cohorts most dependent on future inheritance are Generation X and Gen Z.
- The data underscores how difficult it has become for younger generations to have upward mobility, or the ability to rise to a higher level of income, without the help of their parents.
The rich are getting richer — and their kids are hoping to do so as well.
One-third of “mass affluent” Americans say their financial stability depends on receiving an inheritance, according to a new report from Merrill Edge. Specifically, 32% of millennials, 63% of those in Generation Z, and 37% of Gen Xers are anticipating a windfall, mainly from their parents or grandparents.
Their expectations aren’t necessarily the result of a silver-spoon upbringing.
Business Insider’s Hillary Hoffower reported that millennials born in the 1980s are at risk of becoming a “lost generation” that accumulates less wealth during their lives, thanks to coming of age during a period of market fluctuations, high unemployment, and weak wage gains.
Citing a report by the Federal Reserve Bank of St. Louis, Hoffower wrote that older millennials had wealth levels 34% below where they would most likely have been if the financial crisis hadn’t occurred.
The Minneapolis Fed also found last year that the “share of children whose income exceeds that of their parents fell by about 3 percentage points” in the period starting in 1980 — an alarming signal of a decline in US social mobility, or the ability to rise to a higher level of income, according to Business Insider’s Pedro Nicolaci da Costa.
Evidently, younger generations are relying on money from their parents to make up for that lack of wealth.
Within in the next few years, baby boomers are set to pass on trillions of dollars of wealth to their kids. Despite 87% of Gen Zers in the Merrill Edge survey claiming to have a “do-it-myself” approach to money decisions, they’re more than twice as likely as other generations to count on grandparents, extended family, and even friends for financial help.
“We’ve never seen such a strong reliance on receiving an inheritance,” Aron Levine, the head of Merrill Edge, said in the report. “With shifting priorities and growing lifespans, Americans are finding new ways to ensure their financial stability and as such are increasingly looking to others.”
Merrill Edge and Convergys surveyed 1,000 mass-affluent Americans across the country for the report. Mass affluent, in this case, was defined as 18- to 40-year-olds (Gen Zers and millennials) with investable assets (excluding real estate) between $50,000 and $250,000, or 18- to 40-year-olds with investable assets between $20,000 and $50,000 with an annual income of at least $50,000, or those 41 years old and up (Gen Xers and baby boomers) with investable assets between $50,000 and $250,000.
“While it’s great to see investors thinking ahead,” Levine said, “the key to financial freedom is outlining and following an action plan for short- and long-term goals beyond an inheritance — which may or may not ever come.”
Read the full article from it’s original source: http://uk.businessinsider.com/merrill-lynch-survey-millennials-gen-z-rely-on-inheritance-2018-6