Issue #232: Just how 'great' are we talking?

plus a lamb in diapers + invest your refund
͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ 
April 3, 2024 • Issue #232
Dollar Scholar
Electronic Payments Coalition

Hi y’all —

In journalism school, I was always taught to eliminate adjectives and adverbs from my copy. The idea was that, as a writer, I should know how to make the most of every word I use; I should strive to show, not tell.

My professors drilled this rule into me, often using famous quotes attributed to Mark Twain — “When you catch an adjective, kill it” — and Stephen King — “The road to hell is paved with adverbs” — to justify their stance.

Imagine my skepticism, then, when I saw financial experts talking about the quote-unquote “great wealth transfer.” How great, I wondered, could it possibly be? Do they mean “great” as in “big” or “great” as in “good”? Is it even something I need to care about?

Let’s find out whether that adjective is warranted. What is the great wealth transfer, and what does it mean for me?

Chayce Horton, a senior analyst at Cerulli Associates, says the “great wealth transfer” refers to the ongoing transfer of money from baby boomers to Gen X, millennial and Gen Z households.

“Coming out of the financial crisis, we've seen an immense amount of wealth be created, and U.S. households are wealthier than ever,” he says. “There's tens of trillions, almost hundreds of trillions, of dollars floating around, and a majority of that is controlled by households that are over 65 years old.”

But that’s about to change. According to a report from Cerulli, over $84 trillion — with a T — will switch hands through 2045. Nearly $12 trillion of that will go to charity, while the rest will be transferred directly to heirs.

“It's the most significant transfer of wealth intergenerationally that we've ever seen in the world,” Horton adds.

The great wealth transfer comes with a host of societal implications. First, of course, is the fact that a whole bunch of young people are on track to come into a whole bunch of money — “a seismic change,” as one expert put it in a recent Knight Frank report.

Those young people have very different ideals than their ancestors did; notably, they’re incredibly focused on sustainability and social responsibility. As a result, they are “likely to direct significant amounts of capital to causes beyond solely maximizing economic growth,” per the report. That's yet another major reversal from what we’re used to.

My wealth wasn’t an overnight success. It took over 2 weeks to sort out the paperwork for my inheritance.

The great wealth transfer isn’t only going to affect the uber-rich, either. People who own their houses or even just have significant savings in their 401(k)s will likely pass them down, changing the financial equation for their descendents.

“Almost 50% of Americans say that they anticipate some sort of inheritance over the next 10 years,” Lena Haas, head of wealth management advice and solutions at Edward Jones, tells me. “So, clearly, the impact is very, very broad.”

Estimates of the individual amounts vary. One analysis says most millennials expect to inherit at least $350,000 from their relatives, though another says the majority of assets will be eaten up by health care expenses.

But the consensus is that the recipients of these inheritances, gifts, real estate, businesses and family heirlooms will have their financial strategies totally rocked. While young people traditionally have built up their wealth through investing, Horton says there’s going to be a huge section of the population that will now have their financial wellness “staked in how much they get from their parents or grandparents.”

This may have a ripple effect that will impact people who aren’t benefiting from intergenerational wealth, as well.

Say I’ve carefully saved up money for years to buy a home. I could end up in a bidding war against a person who received an immense inheritance, which — combined with their own savings — could allow them to easily outbid me.

Alas, Haas says, research shows neither the givers nor the receivers seem to be ready to deal with the consequences of these wealth transfers. (For instance, 19% of people getting an inheritance say they feel anxious about it.) It’s an inherently emotional, awkward topic, so they avoid talking about it… and that can leave everybody at a disadvantage.

She recommends families make it a priority to sit down, maybe with a financial advisor, and talk transparently about their plans. What are their values as a family? How do they approach charitable contributions? Does one child need more support than others?

“It's so important, regardless where the dollars and cents go, to have the conversations on the values on the legacy and on the fundamental reasons why decisions are made,” Haas adds.

The bottom line
(but please don't tell me you scrolled past all of my hard work)

The great wealth transfer is a major trend/societal movement in which some $84 trillion will be passed down from older adults to Gen Xers, millennials and Gen Zers in the coming decades. This is a big deal because 1) that’s a lot of money, 2) the recipients will spend that cash in different ways than previous generations and 3) almost nobody is prepared for it.

So, yeah, the great wealth transfer is pretty great — and certainly something I should pay attention to.

“We see in the next 25 years that inheritances will be a more critical driver of household wealth in younger generations than it ever has been,” Horton says.

Game Changer
via Giphy

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Electronic Payments Coalition

protect your credit card rewards

Hey. So, it’s no shock to you that a lot of people use credit cards for their perks. Who doesn’t want free things? But at the same time, a lot of people are using them for everyday items like gas and groceries — things we need.

But did you know that system might be under threat? There’s a bill in Congress right now called the Credit Card Competition Act, that if passed, could jeopardize reward programs. Ugh. Learn more at HandsOffMyRewards.com.

Receipt of the week
check out this wild celebrity purchase
Millie Bobby Brown
via Instagram

Actress Millie Bobby Brown inadvertently started pregnancy rumors a while back when she was spotted buying diapers. Now she’s setting the record straight: She was purchasing them for a baby lamb. “I raised him in my bed. He was a few days old, and I bottle-fed him until he was full grown,” she said in a TV interview recently. "He wore a nappy, and then I had to buy nappies, and people thought I was pregnant!" Odd, but I’ve heard stranger things…

Internet gold
five things I'm loving online right now
1
I loved this piece on how the team at Neopets is working to revamp the almost-25-year-old game in service of its fans. Upcoming changes include new lore, creative merch and limited-edition pets. “It feels like 2005 again,” its art coordinator told Inverse. “Weird to say, but that’s how Neopets feels right now.”
2
3
Just look at these blue penguin chicks, born recently at Adventure Aquarium in Camden, New Jersey. There’s Bananas Foster, Kiwi and the newly named Lovie; all three are impossibly fluffy and so small their weight is being measured in grams.
4
So far, the average tax refund this season is $3,109. No matter how much you got, here’s how to invest that cash to make more.
5
Stop what you’re doing and go visit /r/catbellies, a subreddit that features exactly the content you’d think it would. Leo! Misty Louise! Neville!

401(k)9 CONTRIBUTION
send me cute pictures of your pets, please
Coco
via Kimberly Mikrot
Meet Coco, a sassy chihuahua who just learned about the great woof transfur.

See you next week.

P.S. Do you expect to get — or leave — an inheritance? If you had a baby penguin, what would you name it? Have you ever been to Buc-ee’s? Send wealth to julia@money.com, please and thank you.

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