• Market Crumbs

Start Being Nicer To Your Elders, It May Help You Get An Inheritance

Image via Vidar Nordli-Mathisen on Unsplash

Everyone is always saying "OK boomer" but never asks "How's the boomer?" Younger generations may want to start asking that question if they want to be considered for inheritances.

There's about to be a lot of money up for grabs, according to a report from wealth manager United Income. Over the next 30 years, retirees are expected to transfer $36.2 trillion to their families, charities and other beneficiaries. United Income analyzed Federal Reserve data on inheritances over the past 30 years to come up with some interesting findings.

"Wealth equal to nearly two times the size of the U.S. GDP is expected to be gifted to charities and heirs over the next few decades," said United Income founder Matt Fellowes. "It’s a historically unprecedented amount that is almost incomprehensibly large."

Between 1989 and 2016, over $8.5 trillion was transferred to individual households. $427 billion was transferred in 2016, up 119% from the $195 billion that was transferred in 1989. Over the same period, average inheritances have increased by 75% from $169,000 in 1989 to $295,000 in 2016. A more reliable measure, the median inheritance, shows a much smaller $55,000 inheritance, which is an increase of only $15,000 since 1989.

Contrary to popular opinion, inheritances aren't always going to young twenty-somethings. The average age of those receiving an inheritance has risen from 41 years old in 1989 to 51 years old in 2016. The report found that more than 25% of inheritances go to adults over the age of 61 years old.

Unsurprisingly, the majority of households aren't on the receiving end of an inheritance. As a matter of fact, the percentage of households who receive an inheritance is relatively flat at just 20% over the last 30 years. Stocks, cash and other investments represent about 46% of the the average estate with real estate accounting for the rest of the value.

As Market Crumbs previously wrote, Americans born before 1965 now hold $93.3 trillion in household wealth, more than three times the $29.1 trillion held by Gen X and millennials. Baby Boomers hold more than 11 times the household wealth millennials do, with $66.5 trillion in household wealth compared to just $5.9 trillion.

With tens of trillions of dollars set to be transferred to Gen X and millennials over the next few decades, maybe they'll think twice before they say "OK boomer" next time.

Leftover Crumbs

  • As if one trade war wasn't enough. With China's imports of U.S. soybeans falling to a three-month low in October, U.S. President Donald Trump is taking it out on Brazil and Argentina. Trump tweeted "Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries." 

  • It's probably nothing. The Institute for Supply Management Manufacturing Index printed 48.1 in November, coming in below expectations of 49.4. A reading below 50 indicates contraction in manufacturing activity, while a reading above 50 indicates expansion. November marks the fourth-consecutive month the ISM reading came in below 50. New orders and inventories drove the weakness last month, falling 1.9 points and 3.4 points, respectively. In what will surely bring recession fears back to the forefront of the news, nearly all of the key ISM indicators were at contraction levels last month. 

  • Might as well just slap tariffs on everyone at this point. The U.S. government may impose duties of up to 100% on $2.4 billion in imports from France after determining France’s new digital services tax may harm U.S. tech companies. The tariffs could hit French products such as champagne, handbags and cheese. The U.S. Trade Representative’s office said the French tax was "inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected U.S. companies." U.S. Trade Representative Robert Lighthizer said similar investigations into the digital services taxes of Austria, Italy and Turkey could also be opened.

  • Is it time to stock up on french fries? Potato processors, such as those who make french fries, are facing the possibility they may not be able to meet demand as cold, wet weather has damaged potato crops in North America. The U.S. Department of Agriculture forecasts output will drop 6.1% this year to the lowest level since 2010. Output in Idaho, the nation's top producer, is forecast to fall 5.5% this year. "French fry demand has just been outstanding lately, and so supplies can’t meet the demand," Travis Blacker, industry-relations director with the Idaho Potato Commission, said. 

  • Everyone wants to sell chicken sandwiches. With chicken sandwiches from Popeye's and Chick-fil-A becoming increasingly popular, McDonald's has decided to fight back. The company is testing a crispy chicken sandwich served on a buttery potato roll, topped with butter and pickles in Houston and Knoxville through January 26. The board of the National Owners Association, which is a group of franchisees, wrote an email in July saying a southern-style chicken sandwich should be McDonald's top priority. The NOA said in the email "Chick Fil A’s results demonstrate the power of chicken."