Our U.S. Thematic and Equity Strategist Michelle Weaver discusses
how the largest intergenerational wealth transfer in history
could reshape saving, spending and investment behavior across
America.
Read more insights from Morgan Stanley.
----- Transcript -----
Michelle Weaver: Welcome to Thoughts on the
Market. I'm Michelle Weaver, Morgan Stanley's U.S. Thematic and
Equity Strategist.
Today, a powerful force reshaping the financial lives of millions
of Americans: inheritance.
It's Friday, October 10th at 10am in New York.
Americans are living longer and they're passing on their wealth
later. Longevity is one of Morgan Stanley Research's four key
themes, and this is an interesting element of longevity. As baby
boomers age, they're expected to transfer their wealth to Gen X,
millennials and Gen Z to the tune of tens or even hundreds of
trillions of U.S. dollars.
Estimates vary widely, but the amounts are unprecedented. And so,
inheritance isn't just a family milestone; it's becoming an
important cornerstone of financial planning and longevity. And
understanding who's receiving, expecting, and using their
inheritances is key to forecasting how Americans save, spend, and
invest.
According to our latest AlphaWise survey, 17 percent of U.S.
consumers have received an inheritance, and another 14 percent
expect to receive one in the future. Younger Americans are
especially optimistic. Their expectations split evenly between
those anticipating an inheritance within the next 10 years and
those expecting it further out.
But here's the kicker; income plays a huge role. Only 17 percent
of lower income consumers report receiving or expecting an
inheritance, but that number jumps to 43 percent among higher
income households highlighting a clear wealth divide.
What about the size of the inheritance? In our survey, those who
received or expect to receive an inheritance fall broadly into
three categories. About half reported amounts under $100,000
dollars. For about a third, that amount rose to under $500,000.
And then meanwhile, 10 per cent reported an inheritance of half a
million dollars or more.
Younger consumers tend to report smaller amounts, while
inheritance size rises with income. One important thing to
remember about our survey though, is it looks more at the average
person. We are missing some of those very high net worth
demographics in there where I would expect inheritance to rise
much higher than half a million.
And so, when we think about this, how will recipients use this
wealth? That's a really important question. The majority, about
60 percent, say they have or will put their inheritance towards
savings, retirement, or investments. About a third say they'll
use it for housing or paying down debt. Day-to-day consumption,
travel, education and even starting a business or giving to
charity also featured in the survey responses – but to a lesser
extent.
The financial impact of inheritance is significant: 46 percent of
recipients say it makes them feel more financially secure; 40
percent cite improvements in savings; and 22 percent associate it
with increased spending. Some even report retiring earlier or
lightening their workloads.
Inheritance trends are shaping consumer behavior and have the
power to influence spending patterns across industries. To sum it
up, inheritance isn't just a family matter, it's a market mover.
Thanks for listening. If you enjoy the show, please leave us a
review wherever you listen, and share Thoughts on the Market with
a friend or colleague today.
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