Over a third of mass affluent Millennials and Gen Xers, and 1 in 5 Boomers, are relying on an inheritance to achieve financial stability
If this isn’t a cry for financial wellness programs and a testament to saving in a 401k, we’re not sure what is.
A third of mass affluent Americans are counting on an inheritance to help them out, according to recent research.
Mass affluent refers to those who have a household income of more than $75,000 and between $100,000 to $1,000,000 in liquid financial assets.
The latest Merrill Edge Report found 32 percent of Millennials and 36 percent of Gen Xers categorized as mass affluent say their financial stability is dependent on an inheritance. Even more concerning, one in five Baby Boomers—for whom retirement is quickly approaching—say the same.
This figure is much worse—63 percent—for Gen Z (18- to 22-year-olds). In spite of this, 87 percent of the youngest generation describe their financial situation as “do-it-myself.”
“We’ve never seen such a strong reliance on receiving an inheritance,” Aron Levine, head of Merrill Edge, said in a statement. “With shifting priorities and growing lifespans, Americans are finding new ways to ensure their financial stability and are increasingly looking to others.”
Echoing this sentiment, Levine added, “While it’s great to see investors thinking ahead, the key to financial freedom is outlining and following an action plan for short- and long-term goals beyond an inheritance — which may or may not ever come.”
The report uncovered additional financial trends among the mass affluent, as well.
For instance, data show investors are prioritizing social investments, but not over financial gains. Almost nine in 10 (88 percent) invest in stocks based on performance, followed by its ability to pay dividends (85 percent).
Those who invest based on social values prefer to choose companies that pay women and men equally (87 percent); promote diverse senior leadership (85 percent); demonstrate commitment to environmental sustainability (78 percent); share similar religious beliefs (62 percent); and support the LGBTQ community (61 percent).
In line with other research about the widespread acceptance of most things tech, the majority of Americans (69 percent) believe that, within their lifetime, technology will be used to help make all financial decisions.
Two in five say they are currently comfortable consulting artificial intelligence for financial guidance. Forty-five percent would trust AI for spending and saving advice; 32 percent would trust it to make investments on their behalf.
These figures are higher than the amount of trust that respondents would place in technology’s ability to drive a car (28 percent), post to social media (29 percent) or select their wardrobe (26 percent).
Yet, in-person advice remains paramount. A little over eight in 10 Americans prefer to receive financial guidance from an advisor compared to 70 percent who turn to wealthy friends, 69 percent who look to older generations and 50 percent who consult finance apps.
“While we’re seeing rapid adoption of emerging technologies, investors truly want the best of both worlds – digital and physical – when it comes to decision-making, not one or the other,” Levine concluded.