Millennials are said to be on the brink of becoming the wealthiest generation in history, with estimates indicating a whopping $90 trillion wealth transfer within the next two decades. As older generations, such as the silent generation and baby boomers, start passing on their assets to millennials, it begs the question of whether this younger generation is adequately prepared to manage such a substantial flow of income.
According to Salvatore Buscemi, co-founder and managing partner of Brahmin Partners, millennials may not be as well-prepared as their predecessors when it comes to handling wealth. He highlights that many millennials may lack the necessary skill sets to start their own businesses or make sound investments by the time they inherit this significant wealth. Buscemi suggests that because millennials have not been pushed to acquire these skills earlier in life, they may struggle to motivate themselves to do so later on.
Experts suggest that millennials tend to have more near-term financial goals compared to older generations, who prioritize saving for milestones like starting a family and retirement. While millennials did experience the global financial crisis of 2008, they may not have the same financial mindset as their parents who lived through the aftermath of World War II. Research indicates that millennials are more likely to live paycheck to paycheck, especially as they find themselves supporting both aging parents and their own children.
There is a distinction between individuals who have earned their wealth through hard work and those who inherit it. Clinical psychotherapist Paul Hokemeyer notes that those who have earned their wealth typically have a strong sense of internal control, feeling confident in their ability to earn it back if lost. On the other hand, individuals who inherit their wealth may feel more insecure, unsure of their capabilities to navigate the complexities of managing and potentially losing substantial wealth.
Overall, as millennials stand on the brink of inheriting an unprecedented amount of wealth, there are valid concerns regarding their preparedness to handle such a significant financial influx. With changing financial habits, differing priorities, and potential skill gaps, it remains to be seen how this generation will navigate the complexities of wealth management in the years to come.