Baby Boomers to Inherit Record Amount
Lang, Susan S., Human Ecology Forum
The "baby boom" generation stands to inherit the biggest bounty ever--more than $10 trillion--an average of $90,000 each (in 1989 dollars), according to a new study that updates a study two years ago with current figures.
"These inheritances will have more impact on personal wealth than inheritances have ever had before," says Robert Avery, professor of consumer economics and housing.
However, only about one-quarter of the boomers will actually inherit more than $50,000, because the wealth is becoming increasingly concentrated among the wealthy, who tend to have fewer children, Avery reports.
"In other words, the baby boom inheritances are likely to exacerbate wealth inequality," he says.
In looking at the impact that the bequests or potential bequests have on the spending and saving of baby boomers, Avery and colleague Michael Rendall, also in the Department of Consumer Economics and Housing, found individuals who already had received inheritances had less noninherited wealth than expected. They evidently were spending down their inheritances.
"Baby boomers who expect inheritances, on the other hand, actually save more than their counterparts who do not expect inheritances," Avery says. One reason may be because of the great uncertainty involved with the timing and carving up of inheritances. The other reason, Avery says, is that baby boomers who expect inheritances may be coming from wealthier families and already have more money to save than those who expect no inheritance.
The study analyzed data from the 1989 Survey of Consumer Finances, the third in a series of recent tri-annual surveys of household wealth conducted by the Federal Reserve Board and other federal agencies. …