Introduction
The growing wealth gap between Baby Boomers and younger generations will now take center stage in any economic discussion made, especially in 2024. Baby Boomers are described as the “luckiest generation” when it comes to gains in the economy, but what makes them lucky are the unexampled levels of public and personal debt they leave for the newer generations. How does this financial legacy weigh on Millennials, Gen Z, and all of their successors?.
Boomers’ Economic Good Fortune
Members of the Boomers who were born between 1946 and 1964 experienced a golden age of economic opportunity. Since World War II, they enjoyed jobs, housing they could afford to buy, and strong social welfare programs. Boomers accumulated wealth partly through policies like government-backed pensions, booming real estate markets, and manageable inflation. This makes the Boomers the wealthiest generation in modern history. Boomers now hold a disproportionate share of global assets, especially in the advanced economies of the UK and the US.
The distribution of this wealth is, however, far from even. While the richest Boomers have amassed significant reserves of money, a large portion of the generation is also burdened by the costs of healthcare and other late-life expenses. Still, all things considered, Boomers benefited from a macroeconomic environment much more favorable than that currently bequeathed to younger generations.
Inheriting Wealth-And Debt
If one rolls the dice, Millennials and Gen Z will inherit the same amount of wealth a majority of the time—that is, they will inherit levels of debt that are utterly unprecedented. Public debt in the UK stands at over 100 percent GDP and will be paid off by young citizens for generations to come. “Housing and education debt feed these challenges to make it increasingly difficult for young people to save despite the benefits of their potential inheritances.”.
Again, most of the inheritance may not come in liquid but in properties tied to housing and other investments. Though property is not going out of fashion anytime soon, most of the youth face quite a challenge when trying to afford houses, especially as the prices continue raising their bar.
Most inherit these assets, but probably with the strings attached—mostly the mortgages and costs of maintenance.
The Widening Generational Gap
The rise in economic inequality also has the dimension of an increasing divide between generations. For example, it is the Boomer generation that is often accused of being responsible for the state of the economy-the high student debt, unaffordable housing, and precarious jobs. Young adults are mostly frustrated with the state of their economic situation, blaming the Boomers for having it too good and wondering how one can get started in building one’s financial future on an increasing burden of debt.
Public policies, such as age-related tax breaks for homeowners and pension plans, have, for many years, been biased towards the more senior generation. Politicians hardly discuss the young people’s concerns, such as increasing living costs, stagnant wages, and less social protection. Amidst these persistent economic setbacks, some millennials and members of Gen Z have postponed major life milestones like buying a home and getting married.
Role of Public Policy
The economic policy choices have only expanded the intergenerational wealth gap into previous decades. All such measures included privatization, deregulation, and tax cuts for the old generation, pushing up the cost of living of younger people. Britain was another great example where all these austerity measures included cutting public services after the 2008 financial crisis further widened this gap.
So far, some economists propose reform through wealth taxes, better access to affordable housing, and student debt forgiveness. Without reform, the future economic picture looks pretty bleak for young generations. Inheritances by the millennials in the form of an inheritance left behind by their Boomer parents will be patchy and, even then, unlikely to remedy the structural issues that they face.
Looking Ahead: The Economic Legacy of Boomers
One of the largest intergenerational wealth transfers in modern history will constitute a mixed blessing. On the one hand, the Millennials and Gen Z are set to inherit trillions of dollars globally, with $68 trillion in the US alone being estimated by 2030. On the other hand, this process of wealth transfer brings the responsibilities that come with managing estates, relieving remaining debts, and facing the ongoing housing crisis. The inheritances may not cover the broader economic strains of education costs, stagnant wages, and an overburdened welfare system.
In reality, many young people will not receive large inheritances since much of the Boomer wealth is concentrated in the hands of a few. This concentration of wealth may make inequality worse even as prices are going up. Others who inherit will have pricey barriers to overcome as they try to manage their wealth—through taxations, property maintenance, and navigation of financial markets in an increasingly unpredictable world.
Conclusion
While the Baby Boomers are poised to transfer trillions of dollars in assets, that burden also likely leaves behind the kind of financial dilemmas for younger generations that could impact their long-term prosperity. Addressing such entrenchment problems will call for protracted and multi-pronged policy reforms and overhauls of economic structures that have benefited mostly the older, rather than the younger, generations.
In short, while Boomers cash in on the economic bonanza, younger generations will be left facing a starker truth—debt and uncertainty will define their economic reality. Their future well-being depends on political choices currently being made regarding relief on debt, taxation, and housing reform.
