The Baby BOOM! The Largest Generational Wealth Transfer in History
From the Silent Era to the Great BOOM!
To gain a good understanding of the time we're living in, it’s always a good practice to turn back the clock and look into our past. We start our journey in 1901, a post war America divided economically but surging in national unity. The progressive era was gaining momentum, but Americans were struggling economically.
In 1901, a generation was born… The Greatest Generation!
This is a generation that wouldn’t feel the fruits of its labor until the fall of Nazi Germany. American spirit was high and the US re-invented its military into a world superpower. The United States realized its new seat at the world stage and started to invest heavily in industrial expansion. This led to a surge in jobs and prosperity Americans never had the luxury of feeling before…
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In the early 1900’s, Americans were getting their pockets and bellies finally getting filled, Americans were keen on investing in their future. This meant homeownership saw growth and an economic resurgence it had never seen before. But the buck didn’t end here…
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Americans invested heavily in government bonds with high appreciation rates and diverse private sector portfolios allowing for further economic stimulation. The Greatest Generation didn’t just invest in the intangible though... They also invested heavily in physical material such as high priced art pieces and precious metals like silver and gold.
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The economy was going gangbusters and this materialized wealth didn’t just vanish. It was transferred…​​​​
A Transfer for The Ages
Over the next decade billions of dollars in different sectors with varying asset types will be moved to Generation X. The wealth accumulated by Baby Boomers via The Greatest Generation, who have benefited from decades of economic growth and prosperity, is now set to cascade down their wealth to their heirs.
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Real estate is a key part of the wealth transfer from Baby Boomers to Generation X as the chart below shows. Baby Boomers inherited significant residential and commercial properties from the Greatest Generation, which have appreciated substantially over the decades. Generation X will inherit these properties, gaining both the physical assets and the associated equity as well as potential rental income.
In addition to real estate Generation X will inherit substantial investments in stocks and bonds from Baby Boomers, who have diversified their portfolios significantly over the years. This transfer will enhance Generation X’s financial portfolios, providing a diversified income base and exponential growth potential. Additionally, retirement accounts like 401(k)s and IRAs, which have grown tax-deferred for decades, will be passed down. This will give Generation X a solid foundation for their own retirement planning, ensuring financial security in their later years. This will not only lead to stability and security but also opportunity to have funds for leisure and travel. This wealth transfer has the potential to significantly bolster the financial stability and growth prospects of the next generation!
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In The Thirties We Thrive
As we look forward to the 2030s the potential for unprecedented economic prosperity is very real. The wealth transfer from Baby Boomers to Generation X promises to invigorate financial markets and pour gasoline on the free market. Real estate, investments in stocks and bonds, and substantial retirement accounts will provide the next generation with an ironclad foundation and entrepreneurial potential.
This era could see remarkable advancements in technology, healthcare, and sustainable practices, driven by the influx of capital and diverse investment portfolios. The Thriving Thirties may also bring about a more equitable distribution of wealth, with increased financial stability allowing for greater philanthropic endeavors and community investments.
While the potential for economic prosperity and improved quality of life is exciting, it’s important to remain cautious and not get too hasty. The journey to prosperity is fraught with uncertainties, and we must stay vigilant to navigate potential challenges that may spring up. The current white elephant in the room is AI and with automation already altering the job market, nothing is guaranteed. However AI has shown promise in creating 97 million new jobs as well, so there is optimism there. So, as we step into this promising decade in 6 years, let’s say it together: knock on wood..