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Advisers brace for largest transfer of wealth in history

PHOTO COURTESY OF CHRISTA NEU/LEHIGH UNIVERSITY COMMUNICATIONS AND PUBLIC AFFAIRS/ University Center on the Southside Bethlehem campus of Lehigh University. Payments made directly to colleges for another person’s tuition are tax exempt.

According to the consulting firm Accenture, the U.S. will see the largest transfer of wealth in its history over the next 30 years. Baby boomers will pass on their estates to heirs, and about $30 trillion will be transferred.

This intergenerational transfer of wealth from the wealthiest and one-time largest generation in U.S. history to its children and grandchildren is causing both challenges and opportunities for investors and financial advisers.

Investors need to ensure they have enough savings and income for a longer life expectancy than previous generations and also face the possibility of greater long-term health care costs.

Financial advisers, meanwhile, need to understand the distinctive financial mindset of the next generation – primarily Gen-Xers – that receives these gifts. Plus, advisers must learn how to communicate with the fast-moving Gen-Xers to retain and expand their client base.

“It has already started, but it’s not going to happen all at one time,” Michael Joyce, founder and president of JoycePayne Partners of Bethlehem and Richmond, Va., said of the wealth transfer.


Joyce said his firm is seeing more of the transfer occurring in the form of gifting to children and grandchildren, rather than inheritance.

Under the annual federal gift tax exclusion, people are permitted to gift up to $14,000 per person per year and pay no federal estate or gift tax. Individuals also can pay for medical, dental and tuition expenses for their children or grandchildren as long as they pay the provider directly.

This is the trend that Jonathan Moyer, financial adviser at Moyer Insurance & Financial Solutions of Reading, also is seeing.

“They’re giving them the money now instead of waiting,” he said.


As money is being transferred to the next generation, financial advisers are finding that Generation X members and baby boomers have a very different mindset when it comes to saving for retirement.

Moyer said the traditional retirement plan was a three-legged approach that included a pension, Social Security and small amount of savings.

While most baby boomers have come to realize that they won’t have a pension, they still expect to receive Social Security. Whereas, most Gen-Xers believe there isn’t going to be Social Security by the time they retire.


Joyce said Gen-Xers tend to be more conservative.

“They came of age after 9/11. They saw the worst financial crises since the Great Depression,” he said. “They’re interested in savings.”

Joyce and Moyer cautioned baby boomers to first ensure they have enough savings to cover their cost of living before even considering a financial gift to their heirs.

Moyer, who works mostly with younger baby boomers, said that many of his clients are not yet financially secure enough to start giving their money away.

“Many of our clients want to help out their children and grandchildren,” Joyce said. “I applaud that. They want to see the fruits of it while they’re still alive, but they need to make sure they don’t overdo it.”


Today’s baby boomers are facing interesting financial challenges.

First, people are living longer. According to the Centers for Disease Control, boomers born in 1960 had a life expectancy of 69.7 years at birth; whereas, someone born in 1900 had a life expectancy of 47.3 years at birth.

These added years mean that baby boomers need to plan for more living expenses and realize there’s a higher probability of expensive long-term health care costs.

Additional financial challenges include the increase of second marriages and the existing low interest-rate environment.

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