The ‘Great Wealth Transfer’ Is Underway but Nearly Half Expecting an Inheritance Are Not Ready to Manage It, Finds New York Life Wealth Watch Survey

Inflation, rising credit card debt and a sense of “going it alone” in retirement are impacting financial confidence

NEW YORK--(BUSINESS WIRE)--
The “Great Wealth Transfer” is underway and 15% of American adults expect to receive an inheritance in the next decade, according to the latest findings from the New York Life Wealth Watch survey. While inherited wealth may provide a financial lift for some, overall, Americans’ financial progress is impacted by inflation, growing credit card debt, and unexpected expenses. In fact, lack of emergency savings (29%), health care costs (27%), and credit card debt (26%) are the biggest risks adults perceive to their financial security and wellbeing. Of the 42% of adults who currently have credit card debt, 35% said their debt has increased in the last year by an average of $4,156.91, for an average total owed of $8,431.02.

Additionally, not all those inheriting wealth are confident in their ability to manage the funds. Only 42% of adults that expect to receive an inheritance feel very comfortable financially handling the new wealth that will be passed down. They are, however, feeling the impacts of inflation, as 58% of adults expecting an inheritance say inflation will have a medium-to-large impact on the sum.

“We are still in a turbulent economic environment. Inflation and higher interest rates continue to make credit card debt a challenge, compounded by unexpected expenses and a lack of emergency savings. Even those who are set to receive an inheritance in the next 10 years do not feel entirely confident managing it,” said Suzanne Schmitt, Head of Financial Wellness at New York Life. “The data show us that people continue to be focused on the basics – paying down debt, building emergency savings, and contributing to their retirement – but it can feel incredibly difficult to plan for longer-term goals like buying a home, growing your family or retiring when day-to-day challenges are occupying your time and attention.”

The “Great Wealth Transfer” underway may pose more challenges than expected

• In the past ten years, 17% of adults received an inheritance from a parent, spouse, family member or another individual, particularly Baby Boomers (22%).
  
• In the next ten years, 15% of adults anticipate receiving an inheritance from a parent, spouse, family member or another individual.
  • Among those that anticipate receiving an inheritance, 71% expect it to be from their parents/guardians, followed by a spouse (21%).

  • Among those that anticipate receiving an inheritance, 58% expect cash, 43% expect owned property like a house, 28% expect investments like stocks and bonds, 24% expect proceeds from a life insurance policy, 21% expect jewelry or other family heirlooms, and 14% expect to inherit an annuity.
• On average, adults that expect to receive an inheritance anticipate receiving a value of $738,724.23.

• 58% of adults that expect to receive an inheritance anticipate inflation having a large or medium impact on the value of their inheritance and only 42% of adults that expect to receive an inheritance feel very comfortable financially handling the new wealth.
  • Nearly twice as many women that expect to receive an inheritance (23%) feel uncomfortable managing their inheritance than men that expect to receive an inheritance (12%).

• Paying off debt (37%), supplementing retirement savings (35%), and preserving the inheritance with the intention of passing it down (26%) are the top three ways adults receiving an inheritance plan to use it.

“Navigating competing priorities and family dynamics while grieving can make it even harder to know where to start or where to get reliable and objective advice,” said Schmitt. “While Baby Boomers are the most likely generation to say they prefer to get guidance from a financial or tax professional (29%), Gen Xers and Millennials, two cohorts set to inherit from Baby Boomers through 2045, could benefit from seeking professional advice, too. As the great wealth transfer may benefit some households, not all will feel the effects of economic relief. While there are a number of economic factors making money management more difficult for everyone, guidance from a trusted financial professional can help people navigate how to best manage resources in order to achieve financial goals such as paying down debt, planning for education expenses, bolstering savings, and setting themselves up for a more secure retirement.”

Many feel they are “going it alone” when it comes to retirement and report that they don’t feel support systems are in place to help them

• Adults are split on how they view the level of support provided in retirement, with 56% of adults agreeing that there are support systems in place to help them with retirement – while 44% say that they are “doing it alone.”

• Retirees (49%) are more likely than pre-retirees (42%) to agree that they are managing their retirement alone. Social security (60%), personal savings (47%), and employer provided pension (33%) are the top ways adults plan on supporting themselves in retirement.
  • Younger generations are less likely to plan on supporting themselves with social security in retirement (Gen Z: 33%, Millennials: 44%, Gen X: 61%, Baby Boomers: 87%).

• 75% of adults say they need additional ways to support themselves in retirement – with going back to work part-time (26%), downsizing home/lifestyle (25%), and designing other alternative income streams (19%) as the top ways.

• 36% of adults feel less prepared for retirement compared to their parents/guardians.

• Financial comfort levels and preparedness differ for heterosexual people and LGBTQ+ people.
  • Heterosexual people (39%) are more likely to have retirement savings than LGBTQ+ people (29%).

  • 48% of LGBTQ+ people are not confident in their ability to afford healthcare in retirement compared to 36% of heterosexual people.

  • 38% of LGBTQ+ people feel anxious about their finances overall, compared to 24% of heterosexual people.

• 78% of adults say their ability to save for retirement has been negatively impacted – with current inflation (47%), unexpected expenses (36%) and health issues (26%) being the top three reasons why.
  • Among adults who say current inflation has impacted their retirement savings, over half have changed their budget (54%), followed by changing their savings strategy/saving less (25%) as the top actions taken to mitigate impacts.

• Adults currently have an average of $135,161.50 saved for retirement, and Baby Boomers report having an average of $223,498.27 saved.
  • Adults predict needing $4,342,378.86 saved to retire comfortably. Baby Boomers believe they will need $2,158,345.91.

“The data confirm what we know pre-retirees are experiencing: As traditional retirement savings and income vehicles come under pressure or become unavailable, people are feeling anxious and many also feel unprepared. That effect is compounded by inflation and unexpected expenses, which have made saving for retirement even harder, and that’s before we factor in caregiving, rising healthcare costs and potential long term care needs,” said Schmitt. “Pre-retirees are recognizing the need for more support but are unsure where to get it. For those still in the workforce, employers can play a supportive role by providing savings and planning resources – including access to financial professionals – as part of workplace benefits. This will become even more important as more Americans work later into their lives.”

Credit card debt continues to drive financial anxieties; over 1-in-3 with credit card debt report an increase in their debt in the past year

• Lack of emergency savings (29%), health care costs (27%), and credit card debt (26%) are what adults perceive as the biggest risks to their financial security and wellbeing.

• 42% of adults currently have credit card debt.
  • On average, adults with credit card debt report owing a total of $8,431.02.

  • Gen Xers, oftentimes referred to as the Sandwich Generation, with credit card debt report owing the largest amount: $9,434.42 on average.

• 35% of adults who have credit card debt said their credit card debt has increased in the past year.
  • Adults who say their credit card debt has increased in the past year report an average increase of $4,156.91.

  • Gen Xers with credit card debt are more likely than other generations to say their credit card debt has increased in the past year (41%).

“Gen Xers in particular report struggling with rising credit card debt as interest rates have increased over the past year, likely because many find themselves caring for multiple generations,” said Schmitt. “Across generations, people are struggling to prioritize paying off debt versus bolstering emergency and retirement savings, as both are key elements of financial wellbeing. Fees and interest on revolving credit card balances contribute to vicious cycles of insecurity for households that may already be living paycheck-to-paycheck. Although it’s possible to learn the basics on your own, the more complex your financial life becomes as you age, the more beneficial it will become to seek the guidance of a trusted financial professional who can take into account your unique situation and needs including life stage, goals, and challenges, like debt, unexpected expenses, and health conditions that may impact your financial situation in retirement, and the legacy you want to leave behind to loved ones.”

ABOUT WEALTH WATCH

Wealth Watch is a recurring survey from New York Life that tracks Americans’ financial goals, progress toward those goals and feelings about their ability to secure their financial futures, identifying key themes and trends that are emerging about topics like retirement planning, the role of protection-oriented solutions and the importance of financial guidance.

SURVEY METHODOLOGY

This poll was conducted between June 8–June 11, 2023 among a sample of 4,437 adults. The interviews were conducted online. Results from the full survey have a margin of error of plus or minus 1 percentage point.

ABOUT NEW YORK LIFE

New York Life Insurance Company (www.newyorklife.com), a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States¹ and one of the largest life insurers in the world. Headquartered in New York City, New York Life’s family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life has the highest financial strength ratings currently awarded to any U.S. life insurer from all four of the major credit rating agencies².

¹ Based on revenue as reported by “Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual),” Fortune magazine, 6/5/2023. For methodology, please see https://fortune.com/fortune500/.

² Individual independent rating agency commentary as of10/18/2022: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aaa), Standard & Poor’s (AA+).

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Sara Sefcovic
New York Life Insurance Company

(212) 576-4499

[email protected]

Source: New York Life Insurance Company