The richest generation in history’ – it’s a headline that borders on a winning lottery ticket for the millennials, but the print version of the article has a more complex reading. Though trillions of dollars are waiting to be transferred in the next two decades, by no means is the flow of cash an even-handed process.
According to the Knight Frank Wealth Report 2024, there will be a switchover of $90 trillion from the existing to the millennial generation. It has also been noticed that the millennial generation has suffered from the after-effects of the Great Recession and the pandemic. They have also had to face turbulent times in the housing market. This has resulted in the millennial generation becoming risk- and reality-conscious and some becoming entrepreneurs. For the millennial and Generation X audience who are financially literate, the interplay between risk and opportunity becomes critical.
These are the nine forces that will drive the extent to which the millennials become the wealthiest generation in history: Inheritance deficit, Sustainable investing, Aging of the population, Digital revolution, Higher education, Technological change, Demographics of the working
1. The $90 Trillion Wealth Transfer and Its Impact is Uneven
A forecast by Knight Frank of an asset transfer of $90 trillion by 2044 has been well referenced, but it’s essentially a lottery of birth. “Affluent millennials are projected to benefit the most,” but “those with less affluent parents can expect little to no change.” However, statistics from Northwestern Mutual reveal that “only 32% of millennials plan to inherit and only 22% of Boomers+ plan to pass down the wealth.” This can potentially lead to a widening disparity in wealth.
2. Economic Scars Shaping Financial Behavior
Millennials’ spending habits were shaped in the heat of the 2008 crash and pandemics. LendingTree’s Matt Schulz continues, “The scars from the Great Recession and the pandemic have helped shape millennials’ attitudes on finances,” resulting in millennials beginning to invest sooner, being frugal, and prioritizing financial freedom above all else. According to data from the Federal Reserve, millennials in 2022 had 8.4% more median wealth than Gen Xers of their generation, despite living in more expensive times.
3. The Housing Market Reality Check
A housing entitlement that was once the key to people attaining wealth is now out of reach. With the end of the coronavirus pandemic came the end of mortgage rates that were once lower than 3%. Now, in almost 90% of markets across the US, the cost of renting a three-bedroom apartment is less expensive than buying. This impacts the way that people think about wealth. Some young people think that maybe investing in real estate isn’t the way to get wealthy.
4. Entrepreneurship as a Wealth Engine
America’s SBDC found that 49% of millennials are likely to start a business in the next three years, in order to create wealth. More than half of millennials believe that job security can only be found in owning a business, not in being employees. However, funding remains to date the most significant startup challenge, according to 45% of millennials. Entrepreneurial activities will range from YouTube empires to startups, becoming an alternative career option in itself.
5. Sustainable Investing Goes Mainstream
The Millennials are driving the trend in sustainable finance. According to the Morgan Stanley Sustainable Signals for 2025, “97% of millennials are interested in sustainable investments, with 45% committed to allocating half or more of their portfolios to these investments.” As quoted by Liam Bailey, head of residential research for Europe at Knight Frank, “80% of male and 79% of female millennials are working to reduce their carbon impact. It’s no coincidence that this reflects a new link between wealth creation and sustainability.”
6. ESG Priorities and Generational Divides
According to RBC Wealth Management statistics, close to 85% of young affluent millennials have aligned their investments according to their values, especially environmental, social, and governance principles. Older investors feel less inclined to incur losses for environmental, social, and governance purposes. David Larcker, from Stanford University, says young investors might incur 6-10% losses in their portfolios to enhance environmental stewardship, while Boomers usually will not incur losses.
7. Health Care and Life Extension Expenses as Risks to Wealth Creation
A significant inheritance too can be wiped out by increasing costs of healthcare and long-term care. According to estimates by Fidelity, a 65-year-old person is expected to incur a retirement healthcare cost of $157,500. Genworth shows that the average annual cost of a facility in a nursing home has already surpassed $100,000. A significant portion of this is likely to eat away at the inheritance left behind.
8. The Inheritance Planning Gap
A Northwestern Mutual study describes that 40% of Boomers+ and 65% of Gen X individuals lack a will, and nearly half have not talked to loved ones about their financial plans. Without proper planning, the transferring of estates could possibly experience postponement, loss, or challenges. Financial experts continue to say that knowledge and money are traditionally passed down, and that knowledge may be as valuable as the money itself to inheritors.
9. Optimism Amid Market Tailwinds
Despite the challenges, millennials demonstrate optimism about their income prospects. Knight Frank links this with improved prospects for interest rates, robust performance of the US economy, and stock market performance. The global number of ultra-high net worth individuals has increased by 44 percent within five years, but it is expected to rise another 28 percent by 2028. For those millennials who qualify to inherit, these broader dynamics may intensify the wealth transfer that is expected. However, the achievement to become the richest generation in their lives will not be easy or identical for millennials.
Inheritance, in this regard, will be helpful, but entrepreneurship, green investment, as well as proper planning, will also help. Resilience in their economy, built in times past by means of some crises, in this present day, has become their asset. In fact, for those who understand the challenges, such as estate planning, the next few decades would be full of historical milestones in their increased riches, whose implications would extend beyond their ever-functioning books.
