The Illusion of wealth
Update: June 2024
Wealth: we all chase after it. We all want to be debt-free, worry-free, and provide for our family and friends.
Millennials, in particular, are increasingly relying on their parents’ inheritance to achieve financial stability and achieve financial milestones. Milestones their parents achieved when they were younger than their children are now. This demographic, born in the early 80’s, have been dealing with the economic instability brought upon by the 2008 recession. Wages have stagnated, houses are out of reach for many Millennials, and these trends are driven by multiple factors. Many millennials are finding it extremely challenging (to say the least) to save homeownership, retirement, or starting a family. Consequently, many view their parents’ inheritance as a crucial financial cushion that can help bridge these gaps (Generation Z may have it even worse).
All this is to say: generating wealth for the younger generations has become exceedingly difficult.
People are grappling with high inflation, stagnant wages, skyrocketing housing, and working “side hustles” to pay the bills. Did you know that even wealthy people are feeling this way? In 2023, 59% of what could be described as “affluent” U.S. citizens, feel secure in their assets. Compare this to the whopping 72% of Americans who felt the same, just a year before that, in 2022.
The wealthy are like us: worrying about rampant inflation. They’re not investing, they’re not taking risks with their money: they’re holding on to it, which could be a sign of how shaky the economy is right now.
The wealthy are saddled with substantial debts: they (much like the average joe) is struggling to pay off their mortgages, car loans, and wipe out their credit card balances. Yes, they probably struggle less than the average joe to pay their debts off, but struggling to pay off debts may lead to excessive borrowing. Just like the average joe, the wealthy too, should avoid maintaining credit card debts and pay off loans they have as soon as possible (easier said than done.)
One of the most pressing concerns for wealthy Americans is how much they have saved for retirement. Not just retirement, but their overall estate planning, which includes: paying taxes, paying off loans, ensuring that you have good life insurance, managing issues surrounding health, etc.
These are all things that people across every generation should think about, even cash-strapped Millennials and GenZ.
Taxes are going to become a concern heading into 2024: many taxes could increase in U.S. households. There are a number of taxes from 2016 that are set to expire in 2026. This means that taxes would increase for a number of families. Getting creative with estate planning is the answer.
One way to get around these tax cuts is to gift large trusts to children and other family members.
Hopefully, you’re off to a good start in 2024. You may be able to increase your wealth if you follow sound advice and do your research on estate planning. Start by doing your Will, today!
