Wealth Gap: $400 billion versus median net worth in the US
The wealthiest person in the world had a net worth of $400 billion. This is a visual comparison of the US wealth gap.
Much has been written about the massive transfer of wealth, the historic passage of assets from the oldest American to the younger generation in the next 20 years.
But the kids may have to wait.
Between 2024 and 2048, a wave of “horizontal” transfers following the death of husbands and wives, passed from one spouse to another spouse, not from a child or grandchild.
And more than 95% of that wealth is sent to women.
Many young adults have fixed their hopes for a wealthy generation exchange, a massive transfer of wealth, which can pass $84 trillion from older Americans to children and other beneficiaries.
This money comes from the dilapidated baby boomers and members of the Silent Generation. Over the years they have accumulated incredible amounts of money in their home equity, investments and other assets.
Much of the wealth is ultimately passed on to the children. But first, trillions of dollars transfer from one spouse to another within the same generation. Most often, from dying husband to surviving wife.
By 2048, roughly $54 trillion will pass “mutual” transfers, according to a recent report from Cerulli Associates, a research and consulting firm for the asset and asset management industry.
Almost all wealth is sent to women, as wives tend to drive their husbands away.
“When we talk about the ‘next generation’, that doesn’t always mean younger people. That often means wife,” said Alvina Law, chief wealth strategist at the Wilmington Trust.
A bank of inheritance? You may have to wait.
For young Americans, the coming wave of spouse-to-spouse transfers provides timely reminders. If you are banking your inheritance to get through life, you may be shocked.
“Even if you have wealthy parents, you may not be able to see the amount until you almost retire yourself,” said Chaise Horton, senior analyst at Celli.
Americans are most likely to inherit between the ages of 56 and 65, according to a 2021 analysis by researchers at the University of Pennsylvania Wharton School.
However, most Americans never inherit coins.
Men handle finances in many marriages
The transfer of great wealth to widows also affects millions of elderly Americans.
Men handle finances in many marriages, especially among older Americans. Your spouse may know little or nothing about investment and retirement accounts, bill payment routines, and real estate planning.
“There was always a traditional gender role. Men often made many financial decisions in partnerships,” said Candice Delacona, a New York Real Estate and Trust Attorney.
“We expect women to take more ownership than they are involved in transferring that wealth,” she said. “Because we’re in charge of a lot of it. We get it.”
Women are rapidly confident in their family finances. A 2023 survey by Allianz Life found that 43% of married women were considered home chief financial officers from 34% in 2021.
However, men have long been considered family finance experts, especially in wealthy households. A 2021 academic study found that husbands are considered to have the most knowledge of finance in 90% of the wealthiest households.
Financial advisors should also talk to their wife
One of the purposes of the Cerulli report is to warn financial advisors and property planners that they should talk to both their family partners, not just their husbands.
“It’s really important to establish relationships with families rather than individuals,” he said.
Delacona said it more frankly: “If the financial advisor is only talking to her husband,” she said, “Get a new financial advisor.”
If the partner dies first, experts say the problem of leaving a spouse in charge of family funding for one spouse will become apparent, experts say.
“Whether men or women, you need to plan for your widow,” said Angie O’Leary, head of wealth strategies and solutions at RBC Wealth Management US.
Here are some tips for couples to prepare for the potential death of their partners who pay the bill.
Please help with your real estate planning
Many financial advisors say Americans should have will or trust.
That document is part of a larger estate plan and, among other provisions, directs who will manage your matters in emergencies while you are alive.
Experts say spouses should help with real estate planning.
We will cooperate with the beneficiaries of naming
Investment accounts and life insurance policies often require you to name the beneficiaries who will earn the money that comes with your death.
For many Americans, designating beneficiaries acts as real estate plans. They are legally binding and determine what happens to most of the assets.
The naming beneficiaries facilitate the lives of surviving spouses when one partner dies, experts say.
Share Intel with your household account
Once the spouse dies, surviving partners can face entanglement of utility bills, passwords and pins.
To simplify that process, create a file that contains all of its information, including printed statements for all household accounts. Please update as needed.
Consider adding both spouses to all accounts, including utilities, streaming services, and everyday banks. That way, if one partner dies, the other partner will not have a hard time gaining access.
Long-term care planning
More than 80% of Americans need long-term care, according to the Boston University Resignation Research Center.
Long-term care such as living support allows for rapid discharge of assets. Couples need to plan how to cover their costs, according to Anqi Chen, assistant director of savings and household finance at the Retirement Research Center.
“They will probably live for a long time, especially for widows, and women are likely to need long-term care,” she said.
