Children of Baby Boomers Expected to Receive 750 Billion in Inheritance Transfers

The Canadian Imperial Bank of Commerce deputy chief economist Benjamin Tal, expressed his shock about the amount of money baby boomers will bequeath to their children in the years to come.

On Monday, studies revealed that about $750 billion would be hand down to the younger generation by their parents in inheritance. This figure is the largest recorded in human history. In addition to this is the fact that an increase in this figure is expected in the forthcoming years.

However, this pass of wealth will affect the Canadian economy. It will affect factors such as employment rates, housing etc.

“The parents will be in a position to hand down even more amounts over the years to come. The debt rate of the country will be reduced to a considerable rate because most of the debts will be paid off by the wealth left by parents so even the debt problem will be taken on by baby boomers,” Tal said in an interview conducted by the financial post.

The aging population of Canada is on the increase and it is estimated that there are over 2.5 million Canadians that are over 75 and the figure is not showing signs of reducing. In fact, the aging population has increased by 25% over the years.

Canadians have come to the realization that the mortality rate of the aging population is on the decrease but statistics have shown that the aging populace will soon be reduced. Tal reported saying “yes, Canadians are living longer with mortality rates among the elderly reducing at a steady pace, but data predict that in more realistic terms Canadians 75 and above will pass away in the years to come.”

Going further, Tal reported that the people who are mostly likely to benefit from this wealth are those between the age group 50-75. This in turn, will help these people to handle all of their financial constraints.

However, there is an imbalance in this situation as wealth is being left to people that are already wealthy. “If you look at the difference between the average and the median. The distribution of wealth will be even worse“.

It was discovered that most of Canadians citizens below the age of 75 had received some sort of inheritance that is estimated to be almost $180,000 with the majority of them from the British Colombia.

The transfer of wealth will be of benefit to the real estate industry it will help with making mortgage down payments easier for beneficiaries. Furthermore, it will reduce the amount of time houses stay in the market as there will be added demand.

In his final statement, Tal went on to stress that “given improved real estate values, it’s fair that a large projected inheritance will be transferred as inter vivos gifts, a factor that will have a good impact on home ownership among younger Canadians which will in turn, increase the general expenditure on repairs.”