Transferring Money and Leadership to the Next Generation

We are experiencing the largest movement of wealth from one generation to the next. Baby Boomers are retiring and leaving the workforce, which has a huge impact on our economy. In fact, 10,000 Americans turn 65 every single day.

All that money and power that Baby Boomers have accumulated over their lifetimes needs to be transitioned smoothly to Gen X. Without a successful transfer of wealth and leadership, our country might face hardships that no one is prepared for.

In this episode we dive into:

  • how to take advantage of this transfer of wealth (regardless of if you are receiving a large inheritance or not)
  • how to pass down money to the next generation in a strategic way
  • what this transfer of wealth means for the overall economic and political systems in America

Whether you are on the giving or receiving side of this wealth transfer, this podcast is a must listen.

#WealthTransfer #BabyBoomers #Genx


This is Darryl Lyons, CEO and co-founder of PAX Financial Group. Thank you for listening to Retire in Taxes. Let me give you the legal disclosure that this information is general in nature only. It’s not intended to provide specific tax, investment, or legal advice. Visit PAX Financial Group dot com for more information. So, I also want to make sure that you go to PAX Financial Group.

The e-book that’s getting attention now is on Pivot retirement planning and it’s a specific construction that I spent quite a bit of time working with my team to develop with the consideration of an area of academic study called behavioral finance. And it lays out a specific retirement strategy that you will find value in the content. If you’re thinking about retiring in the next five years or you’ve already retired.

So, check out that e-book. It’s online at PAXFinancialGroup.com. So, 10,000 people turn 65 every single day in the United States, 10,000 people every single day in the United States turn 65. And so, what does this look like? Well, how does this affect us and does this have an economic impact on this experiment called the United States of America?

And it certainly does. And it’s one, as I’m generally find myself thinking about patterns and trends in the future. This has more of an impact on our country than we think. And I’m going to make sure I outline this in a very concise way, given the fact that it’s a robust conversation that is way beyond the scope of this time.

But I’m going to do my best to turn it into some meat. But we’re going to talk about money and leadership because both of those things are going to be transitioned from one generation to another and that the main two generations I’m going to talk about is the baby boomer generation transferring money to Gen X Now, baby boomers were born in 1946 through 1964.

The Gen X generation is the next generation 65 to 80. That’s actually me. I fall into that Gen X category. The interesting thing about the difference between the two is the size and this becomes problematic because there’s a very large baby boomer by definition group of people, but not so much the Gen X. I mean, you could say there’s almost double the number of baby boomers versus Gen X is not quite, but is that significant?

So how do you transfer this money and leadership to a smaller group of people effectively? I mean, there’s a reason we still have 80-year-old presidents. There’s just not enough in Gen X raising their hands or being selected for that matter, to try to catch this or grab the baton and do what they need to do. Do what we need to do as the Gen Xers.

Gen Xers? Did they think differently than baby boomers? Certainly. So let’s talk about some of those differences. We always complain about the next generation. That’s just kind of what we do. But Gen Xers are defined by the AIDS epidemic. They’re defined by the fall of the Berlin Wall, and many of us I can attest to this is defined by that dot com bubble burst and bubble in and of itself.

We’ve often think about diversity in the workplace. We have this idea of a personal and professional balance. We’re really focused on, you know, diversity. We tend to not stick with an employer as long as the previous generation. What’s interesting is by 2028, the Gen Xers will outnumber the baby boomers. But those are just some of the attributes that define that Gen X, whereas if you contrast it with the baby boomer generation, those born between 46 and 64, you would make the case that, hey, we were defined by the Vietnam War, the civil rights movement, even Watergate.

Baby boomers are very focused on loyalty and teamwork, and work on efficiencies. You have to pay your dues. You know, the greatest generation ever born well, I guess that would be the generation right before World War Two. But the impact from that generation is real, the loyalty and the patriotism. So just different approaches to life defined by events.

And certainly, you know, I’m speaking generally, but there are, you know, different approaches to life. So how is this money and leadership going to be transferred to the next generation? And I think we need to go through that in the context of four different people, four different characters. And I’ll talk about each of these characters in in the context.

I think it’ll make sense. One is there’s a group of people that will be the givers. Those will mostly be the baby boomers that transfer the money to the next generation. The second group will be the receivers. This will be a lot of the Gen Xers. The third group will be the opportunist. We’re going to talk a little bit about what that means.

And then the fourth group will be the relay team. And well, I’ll define that a little bit and be cute with words there, but I want to make sure that I frame this up in such a way that you recognize that there are four groups of people that play a role in this transition of leadership and money, and we have to be intentional.

I heard a story the other day that and I don’t know if this is true or not, that somebody left their house to their cat. So, they transition their wealth to their cat. And I suppose that could be done. But as I understand in this story, again, it can’t validate if it’s true or not. But it was a sunny day and the hearse literally ran over the cat.

So, like, I know people are probably going to text me because I had a cat story that wasn’t favorable. But if that story’s true, blows your mind that that actually could exist. But when you transfer money, you can choose what however you want to do it. You can write it up in your will however you want it to play out.

What I’m starting to think about, because this is the baby boomer transition of money, by the way, you just need to know this. This is the largest transition of wealth in our history of the world, largest transition of wealth. You can Google this and there’s thousands of articles on it, largest transition of wealth. And we don’t think about it that much, like, how is this going to impact demographic trends that are taking place?

And it’s certainly going to define us over the next 10 or 15 years. But the greatest massive movement of wealth from one generation to the next is happening. I think we have to start thinking a little bit more intentionally, specifically in the baby boomer generation, who are the majority of our clients that we work with. And I’ve wrestled and done life with over the years and talked with countless of them.

I mean, gosh, I was telling my wife the other day, I’ve spent so much life with so many people, been in this business for 25 years that I’ve seen people go through so much. And it breaks my heart to know that people pass away, that I’ve walked alongside and helped. But what I have learned is that giving while you’re living is more fun.

So, if you are in this baby boomer generation, giving what you’re living is certainly something to consider. Now, every year the IRS gives you a maximum amount that you can give and you can Google the amount it changes every single year, but it’s per person. So you can give X number of dollars to each of your kids.

So can your spouse. You can give then the same X amount to your grandkids and to your daughters-in-law and son-in-law. So, you can give X amount of dollars before you have to file a form 709. Once you file that form, it’s not as though there’s a gift tax necessarily. It’s just notifying the IRS that you made that gift.

I won’t get into the complexities of the estate planning. Maybe we can do that on another podcast, but just know that you can do your giving while you’re living gift tax free if you stay under that number. So why not do it? You can enjoy it. You can watch them, you can walk alongside of them and steward them.

I would not hold it against them. Hey, you didn’t return my text within 24 hours. And you know, I just gave you $10,000. You should. You don’t want to play that game, but I think it’d be a lot more fun if you walked alongside and provided that leadership and guidance and observation. Because if you have other money that you’re going to leave down the road that has more zeroes on it, you can kind of test the waters and see how that will impact their lives.

I think that we discount inheritances, but you’ve heard me say this before, and I’ll say it again an inheritance is what you leave to someone, but a legacy is what you leave in someone. So, if you’re going to give why you live, do it with intentionality. Do it with love and patience. Do it in the context of your financial plan.

So when you’re working with your advisor, have a conversation. And the question to ask is how much can I reasonably give each year to my kids? Where does it threaten my personal financial plan? So that’s the first group, the givers. The second group are the receivers. These are going to typically be the Gen Xers that are going to receive this money, which is hard to believe.

I think it comes out to about $200,000 per person is going to inherit some money. I don’t suspect I’ll be a recipient of any of that money just based on, you know, my family. But many people will. And just be careful if you’re Gen Xer and you’re getting this money, if you have drug addictions, if you’re a liar, if you are lazy.

I’ve worked with lottery winners before. I can tell you wholeheartedly. Money accentuates bad behavior. Money accentuates the fact Warren Buffett even says he goes as far as to say that an inheritance is simply food stamps for the rich. So if you’re about to get a ton of money and you are having marital problems and you’re a slugger, you know who you are may be very careful.

This money does not solve those problems. And, you know, if you’re a baby boomer and you’re going to give money to your kids, just know that you can treat them equally. But it doesn’t mean that you have to give them equal amounts of money. All of that can be outlined in a will and I do recommend that you have a family conference about this, because the reality is there are baby boomers that are going to end up transferring money.

You’re going to have a conference that there’s going to be a family conference. The only question is, will you be there or not? So I want you to be very careful as givers and recipients, for that matter, to think about what impact sudden wealth does to your family. Okay, let’s go to the third group. These are the opportunist.

Look, if you go down from if you’re not from San Antonio, you’re listening. There’s this corridor between Burnie and New Braunfels, small Texas, German towns. And there’s a there’s a road called 46. It’s north of San Antonio. It’s a beautiful road. And if you look along the sides of the road, you have ranch lands owned by old German ranchers that have been passed down generations.

Those branches are not high fence, meaning they’re not they’re not being used to hunt, which is upper Texas. Those ranches are low fence, meaning that these old German ranchers, when they pass away, which is it’s happening right now. The kids that are in Houston and Dallas and L.A. and Austin and maybe San Antonio, they’re not going to want that ranch in split five ways.

They’re going to want the money. And there’s realtors that are going to be opportunistic and sell that land to D.R. Horton or KB. And to develop it. That is happening. That is going to happen. It’s happening and there’s going to be people that take advantage of it and love it or hate it. I mean, we all have our opinions on it, but that’s just going to happen.

And so I think that if you’re looking at this transition of wealth and your businessperson, you’ve got to get in front of this. Look, if you’re in the health care industry, if you’re the dementia industry, if you’re buying stocks in these companies, this trend is going to make people rich and people are going to be able to accumulate wealth.

I mean, if I even think about my own business, one third of all financial advisors are going to retire in the next decade. One third of all financial advisors are going to retire in the next decade. That’s an opportunity for me to either buy an advisory company or take on clients that need a different advisor. So if you’re retired or if your business owner or your even investor, please start thinking about this demographic shift and say, What can I do?

It’s happening. What can I do to take advantage of this opportunity? Because the transition of wealth is going to completely change the game for business. Consumer expectations are already changing, and so you’ve got to ask yourself, where do I go to reap the rewards of this? Okay, the fourth group of people is the relay team. This is the team from the baby boomers to the Gen X that passes the baton of leadership, that passes the baton of leadership in this This baton of leadership is it has to happen.

In fact, if you look at some studies, there’s one from Deloitte and it said that the majority of executives feel that their organizations are unprepared to meet their leadership requirements. It’s another survey from a 2021 survey. Global leadership forecasts found that only 11% of our leaders report having a strong bench. We have to actually I’m calling on baby boomers right now.

Baby boomers. We have to learn leadership from you. You can’t take it to your grave. You have to pass the baton to the next generation. When it comes to leadership. I’ll give you a story real quick. A wise old businessman pours in having a conversation with the young businessman. The young businessman said, Sir, could you tell me what it takes to become wise?

Like you, the old businessman said, Certainly, my son. Two words, the young man. Then ask, Please tell me, sir, what are what are those two words? The wise old man answered, Good decisions. The young man thought about this and then boldly inquired, Sir, can you tell me how you learn to make good decisions? And after thinking for a moment, the wise old man said, Certainly my son, one word experience persisting.

The young man said, Please, sir, permit me one more question. How do you get experience in the wise old business man? Said son, Two words bad decisions. That story conveys so much truth. And so, I beg you, baby boomer friends that are listening, this transition of leadership is happening and it’s time to pass the baton of leadership to that next generation so we can continue to make this country this great experiment one of the great, greatest places to live, to raise a family and to do great things.

So the four groups of people in summary, the givers, the baby boomers, the receivers, generally, the Gen Xers, the opportunities, the relay team transitioning leadership by handing the baton to the next generation. Appreciate you guys tuning in today. This is a very heavy, heavy subject. Lots of research that you can find online on this subject. And again, we have some eBooks that discuss how to effectively transition money to the next generation.

It’s called Pivot Retirement Planning e-book at PAXFinancialGroup.com under the eBooks section. But I want to remind each and every one of you that you think different when you think long term. Have a great day.

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