It’s been termed the “greatest wealth transfer in history.” As the last of the Baby Boomers reach the age of 60 this year, and the oldest approach 80, an estimated $1 trillion of wealth has begun to change hands.¹

The boomers are now commonly referred to as the “luckiest generation” due to their significant leap in prosperity, benefitting from substantial price growth in the housing and financial markets. Consider that the average price of a Canadian home has risen about 800 percent since 1981, when most boomers were in their 20s and 30s — the prime years for household formation.² At that time, a house cost around $75,000,³ though we mustn’t forget that a five- year mortgage back then reached a crippling 21 percent! Over the same period, the S&P/TSX Composite Index Total Return has risen by more than 3,000 percent.⁴

While much of this wealth is anticipated to be passed along, some suggest that we are instead witnessing a shift in the spending habits of the boomers. The Wall Street Journal published an article late last year suggesting that U.S. boomers were the “economy’s silver bullet,” with increases in spending by retirees propping up economic growth to largely avert a recession.

Regardless of the extent to which wealth will transfer, the inevitable generational shift should prompt questions about our own wealth management. Are you prepared for this transition?

According to recent surveys, we may not be doing the best job. Studies continue to show that around one-half of Canadians still don’t have a will; surprisingly, this hasn’t changed over many decades. Only one-quarter of us appear to have a plan for our assets if we are unable to make financial decisions, and only 21 percent have had detailed discussions with beneficiaries or executors of their will.⁵ How about you?

Even if we do have a detailed plan to pass along our assets, many of us do not feel confident in the next generation’s ability to preserve or grow their inheritance.⁶ The old “shirtsleeves to shirtsleeves” adage still holds true, suggesting that wealth gained by one generation is often lost by the third. The first works hard to accumulate wealth, the second benefits and maintains it and the third, having not experienced the hardships of wealth creation, ends up losing it. Planning ahead may be one way to mitigate this risk. Whether it is working alongside you to facilitate a generational wealth transfer plan or assisting younger folks with wealth management education or investing support, we are here to help.

Summer often affords us a bit more downtime, making it an opportune time to assess your own wealth transfer plan. If you’ve yet to give your estate plan the attention it deserves, why not make this a priority? It has the potential to enhance your overall wealth management and can be one of the greatest gifts you leave for your loved ones.

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<sup>1. https://financialpost.com/personal-finance/retirement/canadian-inheritances-could-hit-1-trillion-over-the-next-decade-and-both- bequeathers-and-beneficiaries-need-to-be-ready; 2. Based on CREA April 2024 average national home price of $703,446 and 1981 price of $75,000. These figures are not adjusted for inflation, however consumer prices have risen about 200 percent over those 43 years;
3. https://policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2010/08/Canadas%20Housing%20 Bubble.pdf (page 4); 4. S&P/TSX Composite Total Return Index 1/31/81: 2,658.85 and 1/31/24: 84,500.02; 5. https://www.ig.ca/en/ media-room/media-releases/ig-estate-planning-study-despite-aging-population-most-canadians-lack-estate-plan; 6. https:// financialpost.com/personal-finance/family-finance/high-net-worth-families/most-high-net-worth-individuals-lack-inheritance-plan- despite-largest-transfer-of-wealth-coming-study</sup>

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