Visa says USD $36 trillion inheritance will shape spending

Research by Visa's economics unit found that USD $36 trillion will pass from baby boomers to Gen X and millennial households in the United States over the next 20 years, and that the transfer is already affecting spending decisions.

Visa Business and Economic Insights estimated that baby boomers hold at least USD $93 trillion in assets, but the amount reaching heirs falls sharply once debt, retirement spending, taxes and fees are taken into account. The estimate also excludes the top 1% of households to present what the unit describes as a more realistic picture of inherited wealth flowing through the wider economy.

That leaves around USD $36 trillion set to transfer, or about USD $515,000 for each inheriting household. The research found that the flow of money is large in absolute terms, but more concentrated than headline figures on total boomer wealth suggest.

A central finding is that much of the money is unlikely to be spent quickly. Nearly 75% of inheritance recipients already have a net worth above the median household level, according to the study, leading Visa's economists to conclude that roughly USD $28 trillion of the transfer will be saved or invested rather than used for immediate consumption.

That narrows the direct effect on day-to-day consumer demand. The report estimated that around USD $8 trillion will flow into spending, lifting annual real spending growth by about 0.1 percentage point a year over the next two decades. That is a modest increase at the economy-wide level, even if the effect is more visible in certain sectors.

Targeted spending

The biggest spending effects are likely to appear in categories tied to major life decisions and large purchases. Autos, housing, travel and retail were highlighted as the areas most likely to feel the effect as families receive inheritances or financial support from older relatives.

The study estimated that spending on cars could increase by an average of 6.4% annually over the next 20 years. Housing also featured prominently, with parental help already playing a visible role in the market for younger buyers.

One in four millennial homeowners received help with a deposit from their parents, the research found. It also said 26% of those homeowners would not have been able to buy their current property without that support, underscoring how strongly intergenerational wealth is already shaping access to homeownership.

More than half of the people who expect to receive an inheritance said it is critical to their ability to buy a home. Among millennials, that figure rose to 69%.

Earlier transfers

The findings point to another shift in family finances: wealth is being passed on earlier, not just after death. Many older Americans now prefer to help relatives while they are alive, allowing them to see the effect on housing, travel and other milestones.

Travel patterns offer one example. The research found that 28% of grandparents have already taken a skip-generation trip with their grandchildren without the children's parents, while 35% said they plan to do so within the next three years.

The study also found that 66% of boomers want either to enjoy their wealth themselves or see their heirs enjoy it while they are alive. By contrast, 34% said they planned to preserve it for transfer after death.

Wayne Best, Chief Economist at Visa, said the effect was already visible in sectors where households make their largest financial commitments.

"For businesses in big-ticket sectors like housing and travel, this is not a future trend to watch," Best said. "It is already influencing consumer decisions - and shaping where growth will be distributed in the years ahead."

Business implications

For financial institutions, the report points less to a broad consumer boom than to a long-term contest for assets. If most inherited money is saved or invested, banks, wealth managers, and financial technology groups may see stronger demand from households that suddenly control larger pools of capital.

For retailers and travel companies, the message is narrower. The spending effect exists, but it is concentrated in areas where inherited wealth can change the timing or scale of a purchase rather than transform overall household consumption.

The methodology drew on internal economic modelling, public data from the Federal Reserve Board, the US Department of the Treasury and the US Department of Labour, and third-party consumer survey research. Visa's figures suggest the so-called great wealth transfer is less a single spending surge than a selective shift in who can buy a home, take a family holiday or make a large purchase sooner.