As reported by CNBC’s Sophie Kiderlin, approximately 40 percent of the investors with $1 million or more in assets have no way of passing their wealth onto the next generation. While not every senior has that much in their savings account, generational wealth is something everyone with a multiple generational family should be considering.
Over the next 20 years, it is suspected that an estimated $84 trillion will be passed down from one generation to the next. A sum of that magnitude is almost unimaginable. While more about 60 percent of investors with high assets have an idea of how to leave it to their children and grandchildren, there are still concerns:
- How to split things fairly?
- What do taxes look like?
- How will the next generation spend it?
The concerns over generational wealth have raised an interesting point, the lack of financial transparency, even within the family. Talking about money is difficult, but it’s a necessary conversation to have. As we age, we want to make sure that our assets and savings can look after not only us but the ones we love. A lack on inheritance planning can lead to a mountain of troubles and challenges left for those same people.
Fairness is essential, especially if there are several parties receiving an inheritance. Seniors with assets to leave behind need to have an honest talk with their families, and a financial advisor, about how to adequately divvy things up so that the process is smooth and familial bonds can stay intact.
The solution is to bring your family into your investing process, and demonstrate to the next generation how you invest, and what they can expect from investing themselves. Familial investing can help create generational wealth by helping the younger generations get started with building their own assets that your assets can then add to exponentially.
For more retirement information, follow the Council for Retirement Security.