Young Americans Set to Inherit $30 Trillion. That Affects Their Whole Retirement Mindset

Over 63% of affluent young adults between the ages of 18 and 22, the so-called Generation Z demographic, are counting on familial inheritances to pay for their retirement years.

This is according to a recent Merrill Edge Spring Report compiling data on the subject.

Considering that the children of affluence have more access to resources and financing than the average person, sympathy on this subject may be lacking.

However, the research data by brokerage firm Merrill Edge provides an insight in the difference on how young people view contending with retirement as opposed to previous generations.

The Merrill Edge survey interviewed 1,000 young adults of privilege from Generation Z on the subject.

The survey interviewed demographics from the Baby Boomer generation, Generation X and Millennials as well.

Merrill Edge’s survey considers a member of Generation Z to be affluent according to a set of defining income metrics. The survey deals with people age 18 to 40 with an annual income of at least $50,000.

They also had to have investible assets between $50,000 to $250,000.

Aron Levine, head of Merrill Edge, said that affluent members of Generation Z see inheritance as an entitled form of financial security.

The Generation Z mindset about retirement differs greatly from the Baby Boomer generation. Most Baby Boomers, the parents and grandparents of Generation Z, spent their working lifetimes saving for retirement.

Only about 20% of the Baby Boomer generation were counting on an inheritance to finance their retirement years.

Age of entitlement

The inheritance focus among young affluent people may be a sign more of naïve desperation than greed. Most children of affluence have their needs taken care of, unlike their parents or grandparents.

Also, Generation Z came of age during the so-called sharing economy. Accordingly, their mindset may reflect their retirement financing views.

Surprisingly, the survey reveals that some Generation Z members believe that they will inherit money from people other from parents.

About 17% of Generation Z members think that they will inherit significant sums of money from friends. Only 4% of all people in the Merrill Edge poll felt that way.

The longer life expectancy and saving habits of the parents of Generation Z may be enabling such thinking as well

According to research by UBS Financial Services, 53% of people with over $1 million in investable assets may live to age 100.

Meanwhile, about $30 trillion will be transferred via familial inheritance in the United States over the next three decades.

Christina Kemprecos, a certified trust and financial adviser, advises clients to hold back on inheritances.

Kemprecos, says people put their own retirement futures in jeopardy because they give too much money to their kids.

“I don’t care who you are or how much you’ve saved for retirement, you need to put yourself first,” said Kemprecos.