Many millennials are currently grasping in frustration at long-held American Dreams like homeownership, a steady job and an affordable cost of living. However, over the next twenty years, Millennials are poised to inherit some $90 trillion of assets and become the richest generation in history – but only the ones who already come from affluent families, potentially deepening wealth inequality further.
Between now and 2044 in the US, the Silent Generation and Baby Boomers are expected to hand over the reins of their significant wealth to Millennials, according to The Wealth Report, a periodic report from global property consultant Knight Frank.
But whether you’re a Millennial on the receiving end of that wealth transfer is largely a lottery of birth.
Ultimately, this wealth shift is a result of inheritance from prior generations, largely involving property but also other assets. It will bring “seismic” changes to how wealth is put to use, said Liam Bailey, global head of research at Knight Frank, in a statement.
The research also showed that affluent young people are less likely to see property or real estate as a way to build wealth in the future.
“The low interest rate environment and impressive growth in house prices over the past 15 years is unlikely to be repeated in the next 15,” Mike Pickett, director of Cazenove Capital, said in the report. There’s evidence, he said, that the following generation, Gen Z, may be more comfortable renting a home, leasing a vehicle and living a subscription lifestyle than prior generations.
He added that not only will wealth be transferred to these younger people, but there are a variety of new ways to build wealth.
“It goes beyond a simple shift of existing wealth,” Pickett said. “I think the diversity of opportunity to create wealth has also grown — for example, there are YouTubers worth tens of millions. First-generation wealth creation is on the rise, as is the array of entrepreneurial routes to create it.”
Wealth revival in 2023
The report also revealed that more people became wealthier last year, with a growth in super-wealthy individuals that more than reversed a drop the year before.
The number of ultra-high-net-worth individuals — defined as those with a net worth of $30 million or more — was up 4.3% in 2023 from the year before, to 626,619 people globally, according to the report.
North America saw its share of the ultra-wealthy grow the most of any region, rising 7.2% from last year. It was followed by the Middle East, with a 6.2% increase in the super-wealthy; and Africa, which increased by 3.8%. Latin America is the only region to see its population of ultra-wealthy individuals decline, dropping 3.6% from a year ago.
“The improving interest rate outlook, the robust performance of the US economy and a sharp uptick in equity markets helped wealth creation globally,” said Bailey.
This group of uber-wealthy individuals finds property an attractive investment, the report found. About 19% of this group plans to invest in commercial real estate this year, while 22% plans to buy residential property.
Looking ahead, the number of supremely wealth people is expected to increase by 28% over the next five years, according to the report. While the numbers of the super wealthy are expected to grow, that is a much slower pace than the 44% increase in the five-year period ending in 2023.
More growth in ultra-high-net-worth individuals is expected in Asia, including India, China, Malaysia and Indonesia, the report said.
