The great wealth transfer reality check
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usa.visa.com
I'd go as far as to say it's misleading at best to portray "The kids are alright" and that "Gen X and millennial heirs are starting from a position of strength", when the charts used to back that up are based on net worth per capita, a very poor metric to use for this. They might as well say "A small portion of the kids, that happen to be in the top ~10%, are alright".
> by our estimate the amount spent will be smaller still at $8 trillion,* because most households receiving an inheritance are already affluent and likely to save or invest much of what they receive
A large fraction of the boomers were useless hippies for many years in their 20s so they were living hand to mouth, no assets. Everyone since went to work. The boomers when they did get serious quickly could afford houses got mortgages, putting them in the red for years. Everyone since has had to wait way longer to be in the red like that. So of course when you pause and take a static measurement it looks like generations since are "doing ok" because at whatever point you measure there's more of them banking assets to get to the next step.
Sounds pretty fair to me.
I'm going to stick my neck out and say that this is mostly where we are already.
Agree that before the boomers can pass money to their children, our corporate overlords will find a way to hoover that money into their vaults.
Don't think AI will take everyone's job and is actually orthogonal to this entire issue.
I may sound salty but I’m not. I’ve spent enough time on Reddit to know that the real nightmare is when your parents didn’t save anything and can’t still work. Then, you’re obligated to take care of them and they actively take away from both you and their grandchildren (if they didn’t outright block you from being able to have kids in the first place).
No, you very much are not.
I feel constantly conflicted, the previous generation started with way more and wasted a lot more and now we are called in to support them, affecting their grandchildren? I don't think that's ok
Of course there are other permutations, since life is full of so many uncontrollable factors.
So my kids should suffer more than me, and I should suffer more than my parents?
I’d love to see a source for that.
Please tell me you see the irony in this.
This has been happening for a while already.
And there's a reason why trust and wealth planning has becoming increasingly common.
And while I am optimistic about AI's capabilities and am by no means an AI Luddite, assuming AI will take all jobs in the near future is ludicrous.
This comment of course needs to be taken in the context of HN. In the wider world, we have literal tens of millions of people in the United States who are in poverty and experience daily hunger and deprivation.
[0]: https://www.ers.usda.gov/topics/food-nutrition-assistance/fo...
EDIT since I can't reply to irish-coffee for some reason: nobody said literally starving, OP said experiencing hunger or deprivation.
You have to drill down to "very low food security" to reach the point where someone reports having reduced their food intake, which is a 5.4% number.
Still higher than I'd like! But it's not 47 million people.
Pretty big gap between literal starving and food insecurity.
This is a miscategorization imo, food is incredibly cheap compared to any American income or welfare program.
Defacto job loss is: Your boss thinks you're replaceable with AI, and he fires you then puts the other workers implicitly responsible for your workload, _regardless of AI's capability.
Replacement job loss: AI actually does 100% of your work load.
Defacto jobloss is the insideous love child and will definitely accelerate because the "unwoke" mind virus rich people have that people are all replaceable, useless and "takers" as elon calls it. Workers will put up wiht it because they need a job under neofeudalism.
AI is being used as a scapegoat, but a lot of this is just rightsizing of headcount as I've previously mentioned on HN. Right before GPT-4 we were using COVID as that scapegoat in 2023.
What about when you reach retirement age? Will you consider medical care, a new house, or a cruise to be siphoning off of money that presumably belongs to someone else?
The money is theirs to use as they see fit. Maybe they earned it, maybe they inherited it. It doesn’t matter. You make your own fortune in this world, and then you get to decide how to spend it.
You still need an income. You can only refinance so much, and then you’re paying off interest.
If your home 10x’s in value so does your property tax. Some people are paying $1500/mo. in property tax. They need a job just to cover it.
You can’t sell the house and cash out because you need that cash to buy the next house without having a huge monthly payment.
It’s not enough to just own assets. They have to be capitalized upon in some way - having a renter, building a farm, storage, or other business with it, and so-on.
But nobody is really doing that. I think boomers thought they would get rich off the real estate and it’s not really happening. All it did was make prices out of reach for the average person.
Super wealthy are buying homes at inflated prices which is interesting and surprising but they’re largely not boomers.
Dynasties calling shots maybe, probably. But what’s new?
This isn't how property tax works in many places (assuming you're talking about supply/demand constraint reasons and not individual property development, e.g. apartment building). There is an overall assessment being raised by the entity (e.g., county), and it is divided pro rata across property owners. In this system, if everyone's property goes up 10x, the amount they pay individually stays exactly the same.
If the entire city goes up 10x (without corresponding general inflation), you’ll likely find the tax rate goes down because most places tax property to fund government and few places would quickly swell the city budget by 10x.
That depends on where you live. For example, in California we have Prop 13, which limits how much the assessed value for a home can increase without being sold.
This means that even if your house goes up 10x in value, California will only increase the assessed value for tax purposes by 2% each year.
I bought my home over 20 years ago and it is worth much more than I paid on the market. Yet the value of the property for tax purposes is only 3K more than what I paid for it in 2002.
But the solution I think should come out of the budget -- say, a municipal budget gets $100 today from property taxes, while recent homeowners pay $80 of that. If we just change the assessment rules to make it fair with long-time homeowners, then recent homeowners will pay $90, and long-timers will pay, say, $70. But budget only needs $100, not $160. So we can lower taxes at the same time as equalizing the assessment rules.
Prop 13 was passed through a statewide initiative process, because at the time the statewide politicians were never going do the right thing for retirees that managed to own a house.
Prop 13 is not necessarily a perfect solution, but since that time the politicians inside California or in other states are by and large incapable coming up with any other solutions that would benefit a larger body/group of people who own or are buying homes.
• Applies to age 61+, age 57+ surviving spouse if the person who qualified dies, unable to work due to disability, or disabled veteran with a service connected rating of 40%+.
• Disposable income must be less than 70% of median county income.
• Your assessed value for property tax purposes is the minimum of the actual accessed value and the accessed value when you qualified for the program.
• You are exempted from paying one of the statewide school levies (there are two of them) and from paying "excess levies". Generally, "excess levies" are voter approved levies.
• If your disposable income is less than 60% of the county median household income you also are exempt from regular levies on min($70000, max($50000, 0.35 V)) where V is the assessed taxable value.
• If your disposable income is less then 50% of the county median household income the exemption from regular levies is max($60000, 0.60 V).
In my county those income levels are $65k, $56k, and $46k but are updated every three years and for 2027-2029 will be $93k, $81k, $70k. For a house with a tax of $3600, the tax as you go through those levels would be about $2200, $1900, and $1000 (or maybe it was $2400, $2200, and $1000...it was a while ago that I calculated it and I'm not sure which it was). (For King County, which is where Seattle is, the levels next year will be $101k, $89k, and $76k).
Disposable income is basically all your income, even if it is not taxable, with deductions for various medical things like drugs, in-home care and assistance, Medicare and Medigap premiums, and many others.
If your disposable income goes over the 70% threshold and you lose eligibility but it comes back down after one year and you reapply you get back your original frozen assessment. You can repeat this so you could qualify and get the frozen assessment and the exemptions, then alternate years in which you take a big IRA withdrawal which pushes you over and you pay tax that year based on your actually assessment and with no exemptions, then do a year with the frozen assessment and the exemptions.
It would have if they had paid off their mortgages instead of borrowing against equity, refinancing and taking equity out, etc.
If you still owe 70-80% of your house to the bank when you retire, it's not really an asset.
You have to do something with the land even if it means improving your home, paving a road, to increase the value above and beyond the market trend - to live off of! Otherwise you’re a buyer (or borrower) again
The overall point stands though beyond that nitpick
>plant to do a Skip gen trip?
I have no earthy idea what this could mean but they just casually drop it in there. Thats how you can tell what social class you were born into.
I had a school friend whom's grandparents were one of these in the list it seems. The bought him a 3bed/bath house in the suburbs. He proceeded to do coke for the next 10 years and be a burnout,.but all good because he still has a nice house to live in while being a detriment to society. Yeah I'm bitter so what?
> I have no earthy idea what this could mean but they just casually drop it in there
It's defined in the paragraph above the image you misquoted:
> Skip-generation trips, where grandparents travel with grandchildren without their parents, are a clear example of how the wealth transfer is not just about money. These trips turn wealth into time together, shared memories and a way to pass down values across generations.
A lot of households have done something similar.
Additionally, not all households bought their first house in their 20s - plenty of households did so in their 30s and 40s.
> They could buy a house when you could easily get one for <10 years of salary almost anywhere
And during that era, you had double digit interest rates [0]
[0] - https://www.statista.com/statistics/1338105/volcker-shock-in...
I'd imagine that falls into the bucket of a boomer with a mortgage.
If you have a low-interest mortgage then it doesn't make financial sense to pay it off any faster than you have to. I know many people that carry a mortgage they could easily pay down but choose not to purely on financial optimization grounds.
These are the same people who sold the industrial economy to east asia because pollution, as if we don't all share the same space rock. Inability to think long term or several steps ahead is kind of their thing.
I might take issue with the conclusion at the very bottom that GenX and Millenials are ahead of Boomers on a capital per-capita basis. That might be true, but (for example) when this youngest-of-them Boomer bought his first house, housing was much more affordable. So it's not like the "kids" are necessarily spending their money on the fabled avocado toast (a dish this Boomer enjoys very much, thank you).
New homes use PVC or PEX pipes, drywall, OSB (basically glued-up wood chips) instead of plywood, laminate floors, and plastic or styrene trim.
The only things really better today are insulation and wiring.
PEX is better than copper. Drywall is better than lathe and plaster. Modern OSB like Advantech are just superior to plywood subfloors in every metric. Maybe the hardwood floors were better back then in some ways, but engineered hardwood or vinyl planks are superior in many ways over hardwood flooring. Better wear resistance, less shift with moisture/temp, etc.
Most countertops are far superior these days, with wide availability of quartz, granite, etc.
I’d say almost everything is built better at a minimum standard. You could always find poorly built houses back then, but the difference is there wasn’t even any rules often…
There’s no reason ever to use marble over quartz designed to look like marble… but some people do anyways.
I was speaking to an architect about this very issue a few weeks ago, and he also noted that there are also acoustic properties to plaster and lathe that make it much nicer for residences (and if you have an old home and can afford it, repair the plaster and don't replace it with drywall).
Although maybe texture and acoustics count as aesthetics to you (same with real wood floors looking far better than vinyl). When it comes to materials used in residences, aesthetics matter to a lot of people.
This is a drywall installation issue, though, like you said. Lath and plaster can have the same exact issue with popping. And unlike drywall, lath and plaster has issues with cracking especially if done poorly.
Regarding acoustics, you can easily improve acoustic performance of drywall in many ways. Double layering, acoustic sealing caulk, rockwall in walls, etc. You don’t need plaster to do that.
The only reason I can think that lath and plaster would be superior now is that the floor for how poorly it is done is likely lower, purely because it’s a bit of a lost art.
There's a principle-agent problem here. It is hard for a home buyer to verify claims of the existence of the things you list whereas lath and plaster is easy for a non-professional to learn to recognize. Lath and plaster also is better at forming curved surfaces. (I'm a particular fan of coved ceilings.)
(Criticizing OSB and glazing plywood is crazy. They're both just composite wood products. OSB is totally fine for what it's used for.)
Plywood is getting to be almost as bad.
The glue changed and got categorucally worse 10-20yr ago.
Also, I've noticed newer houses (2000s-present) are airier and have more natural light compared to older (pre-90s) houses.
This depends a bit more on the specific era of the home, rather than just being pre-90s, but it's particularly present in 1970s housing stock. The energy crisis led to a style of home design that favored small windows (energy efficient windows weren't yet really a thing, or at least not widely available at affordable prices) with lower ceilings. After the energy crisis through the 80s things started opening up again, and then improvements in insulation and windows (for two specific features) and improved efficiency in AC units led to a further opening up of home designs (with larger windows, higher ceilings) through the 90s and to today.
Imagine a house-sized plot of land costs $250,000. That means a builder can offer buyers a $20,000 building for $270,000 or a $150,000 building for $400,000. And in the latter case, the buyer gets 7.5x the building for 1.5x the cost.
They have an absolutely vast amount of information about how money flows in the economy, and an interest in finding out where it will flow in the future, and when.
I think my fellow millennials are overlooking something in our complaints about housing prices, which is that the positional status of neighborhoods doesn't stay constant. There's a good chance that the neighborhood you fondly remember growing up in was much less desirable in relative terms than it is today.
My wife and I, for example, bought a house 10 years ago. In that time, the value has easily doubled, growing far faster than wages or inflation. But it's also a completely different product today. 10 years ago, we were young parents willing to make a lot of compromises to get a house on the water. Pre-COVID, the commute was 1:15 minutes each way, 5 days a week. The house next door was a tear-down with a tree growing in the living room. The other houses on the street were small cottages from the 1920s. Today, half of them have been torn down, rebuilt, and filled with more affluent neighbors.
If my kids grow up and say, "I have a professional job, why can't I afford a house like you guys did?" A big part of the answer is: we couldn't have afforded to live in their neighborhood at your age. We bought our house in a completely different neighborhood.
This runs counter to the popular media narrative of poor millennials, but it makes sense. Millennials rose a tailwind of surging stock prices since the '09 bottom, fat white-collar salaries (such as in tech, consulting, finance), and surging home pries, buoyed by cheap mortgages from 2010-2022 thanks to 14 years of near-zero interest rates.
Even when taking into account student loan debt, white-collar workers still earn much more compared to in the 70s-early 2000s. 6 figure salaries for white-collar jobs were uncommon even in the early 2000s whereas they are commonplace today.
If AI becomes a widespread job displacer, I think we’re going to see an amplification of the value of talent. If you think there’s 2x or 10x talent now, you might find there’s 10x or 50x talent with AI.
And 0 talent by 10 ( or even 50 ) is a fucking 0!
And when you factor in inflation and increased housing cost the comparison starts to differ greatly.
Millennials have it pretty tough.
I remember my (Boomer) school teacher parents sitting at the kitchen table with an LED calculator adding up their bills and making sure they could make ends meet or getting blocks of government cheese for some reason (that made great grilled cheese, BTW).
Was it 10% easier for them than Millennials? Maybe. Was it 50% or 100% easier? I don’t think so.
> $36 trillion in baby boomer wealth will pass to Gen X and millennial heirs over the next 20 years after subtracting liabilities, excluding the top 1 percent of households (the outliers in how they spend their wealth)
Why the fuck would you be allowed to include top 1% in first number but not second? They are outliers, yes, so what?
Wealth isn't with boomers: it is with rich boomers, pointing the high mortgage and debt that a lot of boomers have.
And they explain that the wealth is going to stay and be kept by these rich families (which will invest and not spend).
They include the 1% in the wealth calculation, and then exclude it from the wealth transfer to say "see how much taxation is happening?"
If you don't want to include the 1% in the second number, don't include it in the first number.
Instead, it gives insight on a phenomenon that is expected to be an "event". They show that it's going to be gradual, that it already started. Maybe it is a way to inform potential investors in Visa ? Maybe it is a report intended for the business side customers (i.e. commerces) ? I don't know.
Plus, it gives an interesting insight on how the "_real_" economy is still a topic of research where every discourse seem to be on financial performances. I found it interesting after having a repulsed reaction to what I considered a grossly irrelevant account of socio-economic dynamics of the so called "great wealth transfer" (horrible name), like you.