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Will Money Change Everything for Millennials??

Will Money Change Everything for Millennials??

March 04, 2024

Source: Discogs.com

"Money Changes Everything" is a song by American rock band The Brains from their debut studio album in 1980. The song was popularized by Cyndi Lauper, who released a cover version of the song as the fifth single from her 1983 debut studio album, She's So Unusual. Lauper also performed the song at Live Aid. For those of you who need a reminder of the song, a link to the YouTube video is included below.

Money Changes Everything

Millennials are hoping this is true. According to US Global Investors, over the next two decades, members of the Silent Generation, those born before 1946, and Baby Boomers born between 1946 and 1964, will leave their heirs an estimated $84 trillion. Millennials, born between 1981 and 1996, stand to be the largest beneficiaries of these inheritances.

Millennials have a unique relationship with money and the markets. Many of them came of age during the dot.com bust and the 9/11 attacks. They then lived through the 07–08 Great Financial Crisis and subsequently through the Covid-19 pandemic and economic lockdowns. Having seen the markets go through multiple drops of 30% to 50%, their trust in the markets being a mechanism to help them build wealth is somewhat jaded.

A recent survey from USA TODAY asked Americans ages 18 to 44 about their expectations to receive an inheritance and how they expect to use the funds. Interestingly, more than 2/3 of the respondents had either inherited money already or expected to receive an inheritance in the future.

According to the survey, the average expected inheritance is $320,000. Approximately 1/2 believe that they will get $100,000 or more. 33% believe they will receive $200,000 or more. 15% expect to receive at least $500,000, while 6% expect to inherit $1 million or more, as you can see in our first chart below.

Next comes the question of what to do with the funds once they are received. 76% intend to make saving and investing a priority, and paying off debt is of importance to 40% of those surveyed. Nearly 40% of those receiving an inheritance believe that they can pay off their debts with the money they get. 

While paying off student loans, automobile loans, and credit card debt appears to be important, less than 20% intend to pay down or pay off their mortgage. However, more than 20% planned to use some of their newfound wealth for travel and lifestyle goals.

One final observation about the survey produces a bit of irony. While Gen Z and Millennials seem interested in societal issues such as climate change and wealth inequality, only 8% of respondents stated that they plan to donate any of their inherited funds to charitable causes. 

This is even though the majority of those set to inherit money believe that the wealth transfer that will take place over the next two decades will likely increase wealth inequality in the United States. Apparently, when it is all said, and done, more is said than done.

Maybe The Brains and Cyndi Lauper were right: money changes everything. The young people expecting to receive an inheritance certainly hope that it will change their lives for the better. They believe that this will allow them to live with less debt and more financial resources to do what is important to them.

This is an important data point for those clients and parents making estate plans for the benefit of the next generations. We know that you worked hard for your financial resources. We understand that you want them used with integrity and wisdom.

That is why we wanted to remind you that the CFPs of Impel Wealth Management are here for you and your younger family members. As I move towards 60 years old (which is hard for me to say or believe), our younger advisors, Nathan Ollish, CFP, and Irene Zurowski, CFP, would be more than happy to talk through things with your loved ones.

We wanted to remind you that our future generations are here for your future generations. Please let us know if we can help. We thought this was an important reminder as we continue “Moving Life Forward”.

© 2024 Jesse Hurst

The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

Investors cannot directly invest in indices.

Featured blog image source: iStock.com/WaffOzzy