Billionaire Boomer Money

How much money do you have?

A seemingly simple question is becoming a lot more complicated to answer for millions of Americans.

In the next two decades, we will see the greatest wealth transfer in our country's history.

More than 80 trillion dollars will be passed down and trickled throughout the U.S. economy and it’s all thanks to a single generation: “Boomers”.

The geriatric cohort was born in the sweet spot of American history.

After World War II, several strong pre-war economies like Germany and Japan were in shambles and even the winners of the deadliest war in world history like France and Britain were saddled with debt and needed bailed out.

The United States emerged relatively unscathed, loaning huge sums of money to other countries, cementing the dollar as the world’s reserve currency, and becoming the leading global power that it is still today.

Throughout the mid-20th century following the war, the U.S. economy had one of its best growth spurts ever.

Fueled by wartime industrialization efforts and post-war consumer spending, the economy was roaring. From 1945 to 1956, U.S. stocks rose more than 250%.

As boomers became working-class citizens in the 60s and 70s and invested in company pensions, stocks continued rising. Despite a few hurdles, the U.S. stock market experienced huge bull runs in the late 70s, the early 80s, and the 90s with the Dot.com boom.

Since 1969, the S&P 500 has risen astronomically by over 4,000%. Boomers were there for all of it.

Today, the group of adults now in their 60s and 70s, have an average net worth of roughly a million dollars and hold more than half of all of the wealth in America.

Through 2045, the group will pass down tens of trillions to their millennial children and Gen-Z grandchildren in the form of inheritances consisting of cash, real estate, and various financial assets.

A recent survey by USA Today found that 68% of Gen Zers have or expect to receive an inheritance with an average value of over $320,000 while more than half of millennials are expecting a $350,000 payout.

These are huge sums of money that can drastically improve the realities of generations saddled with student loan debt, credit card fees, and the most expensive market to buy a house since 1984. 

What’s more, millennials and Gen-Zers hold very different attitudes when it comes to their professional lives, investments, and new technologies.

Hand millions of young people hundreds of thousands of dollars each, and this group has the power to create massive change not only for themselves, but socially, and economically.

The Great Wealth Transfer will send ripples through existing U.S. markets and stimulate new ones. The question becomes, where will all this money go next?

Going Green

Unlike their parents and grandparents, younger investors are acutely focused on sustainability, leading to the growth of eco-friendly portfolios we are seeing more of today.

A Bank of America Report found that more than ¾ of millennials prioritize investing with an ESG (environmental, social, governance) impact.

Additionally, Gen-Z individuals are reportedly willing to pay 10% premiums for items made sustainably and are the most likely generation to prioritize environmentally friendly companies over household name brands.

As Millenials and Gen-Z stand to benefit from the great wealth transfer, many will start and continue to invest inheritance sums into companies not solely based on their balance sheet, but on their principles.

We are likely to see more young investors pour large capital into businesses and opportunities that prioritize ERG agendas in the near future.

Total ESG AuM (Assets Under Management) is expected to reach 33.6 trillion by 2026, accounting for over a fifth of worldwide assets.

These investments have the power to improve funding and research for renewable energy, fight against climate change, and increase the general public’s adoption of green solutions in their work and daily lives.

Alternative Investments

Bitcoin. NFT’s. Fractional Fine Art.

What do they have in common?

Millennials & Gen-Z love them. Boomers? Not so much.

Younger generations who see traditional investing opportunities as archaic and boring are much more bullish on alternative investments like cryptocurrencies and NFTs (Non-Fungible Tokens) to increase their wealth more quickly.

Unlike their older counterparts, young investors are invested more heavily in digital currencies and other high-risk assets like NFTs that offer greater potential returns than could be seen in the stock market.

In the meme-stock craze of 2020 and 2021, the returns on digital assets in particle were huge, with tradeable tokens like Dogecoin and Bored Ape NFTs seeing their value double or triple in just weeks (many of which subsequently falling even faster).

Their volatility is attractive to younger generations who feel they are behind in their retirement accounts and struggling to recover from outstanding debts as education and consumer costs rise.

On the flip side, new digital platforms like Masterworks now allow potential investors to purchase fractional shares of iconic artwork worth millions of dollars.

Millennials and Gen-Z who are inherently tech-savvy and more risk-seeking are investing in fine art online more than any other generation.

As we see older generations gift their cash and stocks to their children and grandchildren, we should expect to see an increase in interest for and adoption of these riskier asset classes.

Entrepreneurship

Every day, 10,000 boomers are calling it quits and retiring to start the world trip they wished they embarked on at 22. Yet, for many, this means leaving their small business behind, often with no succession plan.

In the U.S. today, more than 40% of small businesses are owned by boomers, with three in four having no plan for their business once they do set sail.

For millennials and Gen-Z opportunists, these small businesses will provide a unique avenue to avoid the 9-5 grind, work for oneself, and transition what may be an already successful business into the digital age.

While some boomers will pass these businesses down, others will be forced to sell to fund their retirements or simply due to their children not wanting to run the family deli.

For both inheritors and entrepreneurs looking for their next venture, managing these small businesses could prove to be an incredibly lucrative and flexible chance to work on something they are interested in, on their terms.

This entrepreneurship by acquisition is becoming a hot path for ambitious fresh MBAs. On the opposite end, these potential acquisitions present a new opportunity for inheritors to privately fund entrepreneurs hoping to revitalize their next small business.

Gifted small businesses will drive a new wave of entrepreneurship that can benefit both inheritors and ambitious young professionals alike.

Thoughts As a Gen Zer

More than anything, when I look at the great wealth transfer set to occur over the next two decades, I see a wave of young people gaining a ton of optionality.

For the artist with student debt, their slate is wiped clean, and they can work on what they are passionate about, without crushing anxiety.

For the budding entrepreneur struggling to acquire capital, they can finally launch the business they want to.

For the small-town millennial who couldn’t afford to see the world after finishing college, they can now embark on an eye-opening adventure.

The success of boomers will propel younger generations to pursue meaning, new experiences, and bold career moves that otherwise wouldn't have been possible.

While the distribution of the wealth may not be equal and some will inherit significantly more than others, I am hopeful that the effects of this money changing hands could make a positive impact on everyone.

From new investments in life-saving technologies to greater funding for green energy efforts, I think a lot of good can come out of this evolving trend.

And if you do stand to benefit from this great wealth transfer, I can only encourage you to seek out opportunities where the money goes farther than a new car or Gucci belt.

You might be able to help make someone else’s life much more rich.

-John Henry

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