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You’ve probably heard this statistic bandied around a lot recently, but I’ll mention it one more time, mainly because it is so astounding: over the next 25 years, $3.5 trillion in wealth will be transferred from one generation to the next.
For context, that’s just (just!) $700 billion shy of the total value of all superannuation accounts currently in Australia. By any measure, it’s a phenomenal amount of money.
Many young Australians are inheriting vast sums with minimal planning or communication.Credit: Monique Westermann
It’s good news for the Millennial/Gen Z/Gen Alpha crowd as the target recipients of much of this wealth, with many likely relying on it as the main way to get into the property market, or to give them the financial freedom to pursue a new career, help raise kids, etc.
The average inheritance size, according to a Productivity Commission study in 2019, is $125,000, with the average age to receive it being about 50 years old. However, a more recent study put that figure closer to $700,000 when property values are considered, and with the rise of “living inheritances”, the average age is likely moving down too.
What’s the problem?
This leaves us with a scenario where more and more money is being given to younger people, often with minimal planning or communication.
For many, it’s more money than they’ll ever have access to (at least until they can access their super). It’s a bit of a perfect storm, one which could lead to people spending their inheritance recklessly, or in a poorly though-out manner.
What you can do about it