Economists Plot Future Windfall from Inheritance

By Ravo, Nick | THE JOURNAL RECORD, July 24, 1990 | Go to article overview

Economists Plot Future Windfall from Inheritance


Ravo, Nick, THE JOURNAL RECORD


By Nick Ravo With the wealthiest generation of elderly people in the country's history reaching the end of their lives, economists are trying to predict what will happen to their money.

The assumption is that a wave of inheritances will provide their children, the baby boom generation, with a windfall. But the federal government is also expected to keep its eyes on the money, and some economists predict a push for higher inheritance taxes to help solve the budget crisis.

``There has been a great run-up of wealth among the elderly,'' said Robert B. Avery, an assistant pofessor of economics at Cornell University.

Much of this accumulation was built between the late 1940s and the late 1960s, when real wages and savings rates were higher and housing costs were lower. For the middle class, the most significant factor may be the escalation of real estate prices over the last 20 years.

``It's a substantial amount of wealth,'' said Frederick A. Elkind, vice president and director of the TrendSights division of the Ogilvy & Mather advertising agency, which forecasts buying and spending habits.

``And there is a potential for a substantial amount of money and assets to be released or transferred to the baby boomers.''

Not everyone believes there will be an inheritace boom. Cheryl Russell, the editor in chief of American Demographics magazine and the author of ``100 Predictions for the Baby Boom Generation,'' acknowledged the unprecedented wealth of today's older people, but she argued that the size of the baby boom generation has grown faster than the size of the parents' estates.

``Most people will inherit only a middling amount of money,'' she said.

Russell also maintained that a variety of variables, particularly health care costs, may reduce the size of many estates. ``It's counting chickens before they hatch,'' she said.

But many economists say that even when rising medical costs and other factors are taken into account, inherited wealth is expected to become a significant economic force.

According to Cornell's Department of Economics and Housing, the total worth of estates at death is expected to rise from $924.1 billion between 1987 and 1991 to $2.1 trillion between 2007 and 2011. The estimates are in 1990 dollars.

``Inheritances as a proportion of total wealth have been increasing over the last 20 to 25 years and will certainly continue increasing in the future,'' said Edward N. Wolff, a professor of economics at New York University.

In all, the 64 million baby boomers stand to inherit an estimated $6.8 trillion between 1987 and 2011. Of course not everyone will benefit equally.

According to the Cornell study, the richest 1 percent of the population will divide one-third of the worth of the estates, each receiving an average inheritance of $3.6 million; the next richest 9 percent will divide another third for an average inheritance of about $396,000; the remaining 90 percent will share the rest.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Economists Plot Future Windfall from Inheritance
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.