“Experts say baby boomers will transfer over $50 trillion in wealth to their heirs. But for many, health care costs will claim the bulk of that wealth.” ~ NBC News
Baby boomers have experienced decades of wealth-building through real estate and the stock market, but skyrocketing healthcare costs will drain those resources faster for those who aren’t extraordinarily wealthy, according to NBC News.
Healthcare costs for elderly Americans and baby boomers are incredibly expensive and frequently wipe out people’s life savings. Thus, many people hoping that the “wealth transfer” will leave them with a substantial inheritance will end up disappointed because health care for older people in America is very expensive and destroying the transfer of wealth from baby boomers to subsequent generations.
According to the Bureau of Labor Statistics, people under the age of 65 reported spending an average of $5,209 per year on their health care in 2022, while those over 65 reported $7,540 annually.
By 2050, there are expected to be 84 million people over 65, according to the Bureau of Labor Statistics. That’s almost 50% more seniors than there are today.
Thus, the widely held belief that baby boomers are going to transfer tens of trillions of dollars to their heirs over the next few decades may not be entirely true.
The “generational wealth transfer” from Baby Boomers to Generation X and Millennials may not be as large as previously forecasted due to the rising costs of healthcare. The overwhelming cost of health care for older people means most people in those later generations won’t inherit much, even if their elders seem well-off today.
Cerulli estimated that 68% of the wealth transferred between 2020 and 2045 — which includes boomers as well as older generations — will come from U.S. households with at least $1 million in investable assets. And only 6.9% of households have that kind of wealth to begin with, Cerulli added.
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