The key to your financial future may lie in your parents’ bank account.
One in three Americans say their financial stability is dependent on receiving an inheritance, according to a survey released Thursday by Merrill Edge, an online discount brokerage service provided by Bank of America Merrill Lynch. Some 36 percent of Generation X-ers and 32 percent of millennials and 20 percent of baby boomers say they’re relying on their family fortunes.
For Generation Z, which is aged 18 to 22, this number jumps to 63 percent, despite 87 percent describing their approach to financial decisions as “do-it-myself.” Planning ahead is smart, but relying on money that may never materialize is not, said Aron Levine, head of Merrill Edge. “We’ve never seen such a strong reliance on receiving an inheritance,” he said.
The 1,000 respondents in the Merrill Edge survey said they were most likely to describe the stock market as “volatile” (34 percent), although it doesn’t appear to be deterring them from investing. Most Americans (57 percent) say they made money in the stock market in the past year with Generation X-ers (67 percent) and those older (68 percent), citing the most financial gains.
Many of the world’s richest people are already transferring their money to their children. Ultra-high-net-worth individuals will transfer $3.9 trillion to the next generation by 2026, according to a study released last year by global wealth consultancy Wealth-X. This reflects a 5 percent decline from the report’s 2014 estimate of $4.1 trillion.
The gap between the rich and poor is widening. The UK-based House of Commons Library said earlier this year that, if current trends continue, the richest 1 percent will control nearly 66 percent of world’s money by 2030. Based on 6 percent annual growth in wealth, they would hold assets worth approximately $305 trillion, up from $140 trillion today, the Guardian reported.
The divergence in the levels of inequality has been “extreme” between Western Europe and the US, according to a separate report, released earlier this year by the World Inequality Lab, a research project in over 70 countries based at the Paris School of Economics, and co-authored by the French economist Thomas Piketty. “The global middle class has been squeezed,” it said.