The Great Wealth Transfer
- Over the next decade or two, there will be a huge transfer of wealth to younger generations estimated at up to 40 trillion dollars.
- If you have a lot of money you plan to transfer to your children or grandchildren, start to communicate and work with them now. It takes about a decade for people to get used to dealing and operating with a lot of money.
- By involving younger generations in learning how to work with wealth now, you help them learn how to control the money versus the money controlling them.
When you have big changes you know are coming up in your life, you typically do a lot of preparation. Perhaps it’s buying a house, having a child, maybe buying a second home, big things that require a lot of preparation. You don’t just jump in to them immediately and then think about the ramifications later.
Something big that is going to take place over the next decade or two is this huge transfer of wealth. Numbers have been thrown out there anywhere from 30-40 trillion dollars, and that money is going to go to Boomers, Gen X’ers, and Millennials. The issue here is that suddenly there are a bunch of younger folks who are going to end up with a lot of money, but they probably will not be prepared for it.
What do I mean by that?
If you don’t have millions of dollars, believe me that it takes time to get comfortable with millions of dollars. You’ve seen it on shows where people win a lot of money and later you find out it destroyed their life, and that’s because they didn’t know how to deal with that money.
A way for parents and grandparents to avoid this issue of sudden wealth bestowed upon their children, is to communicate this to the next generation and start bringing them in before they inherit the money. They need to start seeing how it all works. Having them on statements, having meetings with them, going through each one of these, allows them to start to understand how this all operates in their life. So when they do receive the money, they understand what it takes to make sure they can maintain that level of wealth successfully in to the future so that it doesn’t destroy their lives.
If you are wondering how long it takes to get acclimated to dealing with transferred wealth, it’s about a decade. It takes about that much time for someone to see how a lot of money feels like and how it operates within their lives so the money doesn’t end up controlling them, they control it. And that’s the most important thing. I think every parent and grandparent wants that for their children.
Next time you think about how you’re going to educate your children and communicate this transfer of wealth, make sure you do it sooner rather than later. It will give them a great head start and help them be prepared for the future.
Until next time, enjoy.
Gary Klaben is in our Glenview, IL office and serves our clients who are now located all over the country. Instead of being afraid of change, Gary is always looking at how technology will affect clients and bringing the best of it into the practice. Whether advising his clients, mentoring his team, or coaching entrepreneurs, he is always simplifying complexity and motivating others to take the next action that’s right for them.
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