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How Can You Prepare Your Family for the Great Wealth Transfer?

On the horizon is likely the largest transfer of wealth between generations in the nation’s history. Over the next few decades, the value of inheritance that will change generational hands is estimated to run into the trillions. Do you want to leave a legacy, but don’t know how? Click to Read More

According to a 2015 study by U.S. News & World Report, the “Baby Boomer” generation—those born between the late 1940s and the mid-1960s—controls up to 70% of all disposable income in the United States. Despite advertising and marketing initiatives aimed consistently at younger generations, the Boomers retain enormous financial power. Financial planners estimate the wealth transfer from the Boomers to their successors to be as high as $70 million; studies such as one conducted by Forbes in 2019 indicate that only 19% percent of Boomers are likely to leave nothing to their heirs.

Now is the time to take a look into the financial mirror to determine what role you might play in this intergenerational wealth transfer, and how it might affect you and your loved ones.

Needless to say, this will depend in part on the steps you’ve taken to this point, but with the help of Graceline Community Federal Credit Union, you can begin to take further steps—or initial ones—to ensure that you can play a role in building financial security for your heirs. Doing so will be impossible if you belong to the 19% of Boomers who cannot or will not leave an inheritance—those families will have no stake in the Great Wealth Transfer. It is said that money provides options, and options provide freedom. Consequently, we can say those families will be without financial freedom—they will be in financial bondage. The pandemic has revealed to us the fate of those without financial options. The question becomes whether a lack of options is what you want to pass on to your progeny.

The Muslim community has the ability to make a choice. We can use our strong, clean-living habits to allow us to afford to, at the least, leave a life-insurance policy sufficient to cover our Janazza. The alternative could be as grim as depriving our children of their dignity and leaving a debt for them to pay.  I’m talking here of those who die without taking care of their financial obligations.

A lack of planning and responsibility will leave our own heirs in a financial bind, forcing them to turn to the community and seek burial expenses. Some thusly affected heirs, embarrassed, may decide to borrow the funds they lack and go into debt, or they may deplete their living expenses. Some may cover this type of shame with a sense of entitlement. Either way, such a path is not mentally or financially healthy. Paying for your funeral expenses does not increase your heirs’ net worth; indeed, it exacerbates the wealth-gap problem.

Black households have seen their net worth actually decrease over the last decades. Systemic racism, economic downturns, and the ongoing pandemic are major issues. We should choose not to expand the already-yawning wealth gap with poor planning. 

In their article “Eliminating the Black-White Wealth Gap Is a Generational Challenge,” Christian E. Weller and Lily Roberts of the Center for American Progress describe the dynamic at the heart of the wealth gap: “The persistent Black-white wealth gap is the result of a discriminatory economic system that keeps Black households from achieving the American dream. This system has always made it difficult for Black households to acquire and keep capital, and this lack of capital has created a persistently large racial wealth disparity, as African-Americans have had less wealth to pass on to the next generation than white households.”

 

I have two low-cost solutions to the wealth gap. First, life insurance is the easiest way to leave a legacy that can be turned into generational wealth. If you do not have life insurance, get some today; if you do have insurance, consider buying more.

Get involved with President Biden’s Build Back Better Program in some way. Volunteer or apply for a job with companies that have secured contracts, learn all you can, save your money, and use the knowledge you obtain to create a business plan to apply for additional funding if needed. Then you can bid on contracts for your own company. Never start a business you know little to nothing about, and don’t bid on a contract without adequate resources.

It takes preparation, planning, and solid execution to lead a family out of poverty and into prosperity. The opportunities are out there! Empower yourself, a family, or a community member. Consult a specialist, such as those at Graceline. Choose to leave your family with options.

Copyright 2021 Graceline Community, Inc.

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