Baby Boomer wealth transfer may be smaller than expected due to debt and taxes

A report from Visa Business and Economic Insights suggests that the anticipated "Great Wealth Transfer" from Baby Boomers to Millennials and Gen Xers may be significantly smaller than headline figures suggest.

While estimates of total wealth transfer vary between $93 trillion and $124 trillion, Visa calculates that the actual amount passed on will be approximately $36 trillion. This figure accounts for the exclusion of wealth held by the top 1% of households, the subtraction of debts and liabilities, retirement spending, charitable donations, and taxes and fees. After these deductions, the estimated inheritance is roughly $515,000 per inheriting household.

Several factors contribute to this reduction. Despite their status as a wealthy generation, many Boomers carry significant debt; 41% of homeowners aged 65 to 79 and 31% of those aged 80 and older still hold mortgage debt, alongside credit card and auto loans. Additionally, Boomers are expected to spend approximately $16 trillion on essential costs such as housing, food, and healthcare during retirement.