A new report has weighed in on the financial prospects of the younger generation and revealed that things may not be as bad as they are made out to be.
The Unattainable Dream of Wealth
For many millennials, the idea of wealth and homeownership is a pipe dream.
Millennial Financial Struggles
High property prices, a stagnant job market, and low wages have pushed millennials into becoming the most unhappy generation ever – according to recent Gallup polls and other research.
Housing Market Challenges
High rents and high mortgage rates have caused more and more of the generation to remain living with their parents as they wait for inflation to hopefully cool off and housing to reach an affordable price again.
Impact of Low Wages
The pandemic exacerbated these woes, with many millennials who had managed to leave the nest forced to move back home as jobs were laid off and rents were increased.
Job Losses and Increased Living Costs
Nowadays, it’s not uncommon for millennials to be working more than one job, trying their hardest to cover their bills and rent, while the dream of property ownership remains just that. This, of course, contributes to why they’re the unhappiest generation.
Prioritizing Saving Over Socializing
A lot of this cohort prioritizes staying in and saving over going out, socializing, and having fun. With the rising prices of everything from food to entertainment, it’s no wonder they’re making this choice.
Hope on the Horizon
Well, despite all this doom and gloom, new research by Knight Frank, a global real estate consultant, has revealed that millennials are on track to be the wealthiest generation in history.
Millennials Projected to Be Wealthiest Generation
New data published in Knight Frank’s “The Wealth Report 2024” alleges that the next 20 years will see wealth beginning to shift from the Silent generation and the baby boomers towards millennials, who will take charge of over $90 trillion worth of assets.
A Catch to The Wealth Shift
This could be good news for a lot of millennials who are struggling to make ends meet. Unfortunately, there is a big catch to this – you’ll have to be from a wealthy family to see the benefits of this wealth shift.
Inheritance Dynamics
Inheritance is the name of the game here, as property and other assets are transferred to lucky millennials, along with liquid cash.
Real Estate and Property Prospects
According to the research, “The low-interest rate environment and impressive growth in house prices over the past 15 years is unlikely to be repeated in the next 15.”
Wealth Building Challenges
This basically means that young people are less likely to build up their wealth with property and real estate in the future, although one of the report’s authors, Mike Pickett, does note that new ways to build wealth will spring up.
New Wealth Opportunities
“It goes beyond a simple shift of existing wealth. I think the diversity of opportunity to create wealth has also grown – for example, there are YouTubers worth tens of millions. First-generation wealth creation is on the rise, as is the array of entrepreneurial routes to create it.”
Gen Z Mindset
The report predicts that Gen Z will worry less about owning property, cars, etc., outright and are not afraid of living a “subscription-led lifestyle,” unlike other generations who place a great deal of stock in asset ownership.
Confidence in Wealth Growth
It also points out that Gen Zers are most confident in their ability to create wealth, with female Gen Zers being the most confident out of any cohort – 81% expect their wealth to grow this year.
Generational Comparisons
The study showed that overall, 75% of Gen Z predict their wealth will grow in 2024. In comparison, 52% of baby boomers, 56% of Gen X, and 69% of Millennials share this expectation.
Federal Tax Exemption
Fortunately for those lucky enough to have an inheritance on the cards, the federal tax exemption for inheritance is a lot higher than previous generations saw.
Higher Rates for Inherited Wealth
In 2008, the rate was $2 million, but nowadays, due to various changes in U.S. tax law, the tax exemption rate stands at over $13 million. That’s a lot more inheritance to enjoy without the fear of taxes on top.
Climate Change Concerns
Liam Bailey, the global head of research at Knight Frank, predicted that the new shift in wealth would see itself utilized in combating climate change, writing, “Millennials appear to have got the message when it comes to cutting consumption – 80% of male and 79% of female respondents say they are trying to shrink their carbon footprints.”
Utilizing Inherited Wealth For Good
He optimistically added that inherited wealth would see “younger groups looking at the opportunity it provides to act as a force for change.”
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The post – A $90 Trillion Fortune Is Headed Millennials’ Way – first appeared on From Frugal to Free.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
