As the baby boomer generation prepares to transfer an astounding $68 trillion to their offspring, a significant shift in wealth is underway. However, there’s a catch: recent studies indicate that millennials and Generation Z have quite different expectations about their inheritances compared to what their parents actually intend to leave them. This discrepancy is stirring complications in financial planning, suggesting that the younger generations may receive less inheritance than they expect.

Surveys paint a revealing picture of this mismatch. According to a USA Today Blueprint survey, 68% of millennials and Gen Zers anticipate inheriting around $320,000 on average. Another study by Alliant Credit Union found that 52% of millennials expect at least $350,000. But reality may not meet these expectations, as the same Alliant survey shows that 55% of baby boomers planning to leave an inheritance expect to give less than $250,000. This gap between expectation and reality is setting the stage for potential financial adjustments among the younger generations.

The discrepancy in expectations and reality is even more pronounced when examining inheritance patterns across different demographics. A study by the Federal Reserve Bank of Boston found that only one-third of white families and about one in every 10 Black families receive any inheritance at all. Additionally, more than half of those inheritances amount to less than $50,000.

Isabel Barrow, director of financial planning at Edelman Financial Engines, attributes this disconnect to poor communication between parents and their adult children regarding financial topics. Factors such as inflation, high healthcare costs, and longer life expectancies may be contributing to baby boomers feeling less secure about their financial standing and, consequently, less generous when it comes to passing on their wealth.

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Despite these challenges, the upcoming intergenerational transfer of wealth could potentially make millennials “the richest generation in history,” according to the annual Wealth Report by global real estate consultancy Knight Frank. This influx of funds comes at a crucial time for millennials and Gen Zers, who are facing financial obstacles that their parents did not encounter at their age, such as lower wages (after adjusting for inflation) and larger student loan balances.

To navigate this complex financial landscape, Liz Koehler, head of advisor engagement for BlackRock’s wealth advisory business, emphasizes the importance of open and transparent conversations among families. Parents want to ensure that the next generation shares their values when it comes to building and managing wealth. Firms and advisors who excel in this area are finding ways to facilitate these discussions, helping families establish common values and expectations around financial matters, including philanthropic endeavors.

The Edelman report highlights a major issue: while 90% of parents intend to leave an inheritance to their children, 48% do not have a specific plan in place. This lack of planning underscores the importance of not only determining how much money will be passed down but also mapping out how it will be handed down. Barrow stresses the need for a comprehensive financial plan that addresses these issues and encourages families to discuss them openly.

As the great wealth transfer unfolds, baby boomers must communicate clearly with their adult children about their financial intentions for the younger generations to manage their expectations accordingly. By fostering open dialogues, establishing shared values, and creating comprehensive financial plans, families can navigate this complex landscape and ensure a smoother transition of wealth from one generation to the next.