Research indicates that in the next two decades, more adult children may unexpectedly inherit wealth from the silent generation and baby boomers. The Wealth Report from Knight Frank suggests that members of Generation X and millennials will receive significant transfers of wealth. While Federal Reserve data shows that half of inheritances are under $50,000, younger heirs may begin to inherit larger amounts as boomers age. Surveys have found that more than half of millennials expecting an inheritance anticipate receiving at least $350,000.
Receiving an inheritance can be seen as a gift, but it can also bring stress, especially for younger heirs who may lack financial education and guidance. Katherine Fox, an adviser at Sunnybranch Wealth, notes that many millennials are unprepared to manage a large inheritance and often do not have a financial adviser to assist them. In these cases, inheriting wealth can bring a new set of stressors, as these heirs must navigate decisions related to saving, buying a home, and planning for retirement alongside managing the inherited funds.
Ms. Fox highlights that many young inheritors become overwhelmed by the responsibility of managing a large sum of money that they did not earn themselves. While inheriting significant wealth at a young age can provide a unique advantage, it can also bring feelings of fear and pressure to steward the inheritance properly and ensure its growth. Some inheritors may feel paralyzed by the burden of managing the funds effectively, leading to a fear of failure and potentially losing something they did not work for.
Navigating an inheritance can be even more challenging for millennials who have not received proper financial education or are unfamiliar with managing substantial wealth. Without guidance, these young heirs may struggle to make informed decisions about investing, saving, and planning for the future. This lack of preparation can lead to anxiety and uncertainty about how to best utilize the inherited funds to secure their financial future.
It is essential for young inheritors to seek professional advice and support to help them manage their newfound wealth effectively. Financial advisers can provide guidance on developing a personalized financial plan, making smart investment choices, and preparing for long-term financial security. By working with experts, millennials inheriting wealth can gain the knowledge and confidence needed to make informed decisions and navigate the complexities of managing a significant inheritance.
Inheriting wealth can be a transformative experience for young adults, providing them with opportunities and resources that can significantly impact their financial future. However, it is crucial for inheritors to seek guidance and support to effectively manage their newfound wealth and avoid common pitfalls. By seeking professional advice and developing a thoughtful financial plan, millennials inheriting wealth can navigate the complexities of financial management and work towards securing a stable and prosperous future.
