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Baby boomers slated for inheritance windfall.

CPA financial planners take note: Baby boomers are due to inherit big bucks--$10.4 trillion in all--according to a study undertaken by Cornell University.

Federal Reserve Board data suggest 115 million bequests will total $84.3 billion in 1995; by 2015, 3.4 million bequests will transfer $335.9 billion. All told, the bequests will constitute the largest cash and asset transfer in the history of the United States.

Of course, this tremendous amount is not a creation of assets, simply a transfer. The question is how the money will be used.

"Will the |me generation' see the money as something to spend on consumption or on production?" asked Alfred King, CMA, senior vice-president of Valuation Research Corp. "Its millions of individual decisions will have a strong effect on the economy as a whole."

The impact may not be as strong as it seems at first glance, however. The average inheritance of about $90,000 is 12% less as a percentage of current income than in 1960. The question financial analysts are asking is whether baby boomers, who are 30-50 years old, will assume they won't have to save for retirement or whether they will pay off the debts from the 1980s and invest what's left.
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jul 1, 1994
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