​​​*This article was sponsored by AARP. All views, language, and endorsements expressed in this are solely those of ​Staci Alexander, Vice President, Thought Leadership, AARP and Julie Miller, Director of Thought Leadership, Financial Resilience, AARP and do not necessarily reflect the views or endorsements of the Financial Health Network.​

Widely circulated research in the financial services industry estimates that members of the Silent Generation and baby boomers will pass along as much as $124 trillion in inheritances by 2048. This movement of assets and financial resources is likely to have tremendous implications for their Generation X and Millennial heirs, with effects on investments, home ownership, consumer spending, and more. 

And yet, while the movement of tens of trillions of dollars may seem like a driver of meaningful economic change, the seemingly intractable nature of wealth inequity drives us to ask the question: How might a great transfer of wealth over the next 20 years impact the state of wealth disparities in the United States? And how must we consider issues and solutions that can meaningfully address wealth disparities as people age?  

Wealth inequity has remained a stubborn issue across generations in the United States. In fact, wealth disparities across white, Black, and Latine families have grown over the past four decades. As recently as 2022, the net worth for a Black family earning the median income was approximately $44,000, compared with approximately $284,000 for a white family earning the median income. 

Intergenerational wealth transfers can exacerbate racial wealth disparities as well. Families with more wealth – who are more likely to be white – are better able to access and afford trusted advice, products, and services that support estate planning for passing along their wealth. Families of lesser means often struggle to optimize financial health across generations. 

Insights on Racial Wealth Disparities From Leaders on the Ground

AARP is committed to identifying solutions that can help address wealth disparities across race and other sociodemographic factors. It’s important to look at the potential “opportunity” of wealth transfer through the lens of a persistent racial wealth gap and to explore the effects of these disparities on families and older adults, particularly those outside the wealthiest 10% of Americans. 

To gather insights, AARP partnered with Public Private Strategies to host three virtual roundtable discussions in the late spring and early summer of 2024. These roundtables brought together leaders from different parts of the country – urban and rural – representing business and economic development organizations, community financial institutions, home ownership support organizations, and other stakeholders. They featured candid and insightful exchanges about the drivers of racial wealth disparities, seen through both data and lived experiences. Participants also discussed solutions that can help racially and ethnically diverse communities and families build and sustain wealth across generations.

What We Learned 

Throughout the discussions, several themes arose consistently. While this is just the beginning of a longer conversation – and there is more work to be done – here are some early insights, which range from big-picture factors to granular financial challenges often faced by families in racially and ethnically diverse communities: 

Strategies to help racially and ethnically diverse communities build wealth must be holistic.

The simplistic term “wealth” encompasses homes and property, income, stock holdings, retirement savings, business ownership stakes, and a variety of other assets. Addressing wealth disparities begins with understanding that inequalities persist across these various elements, and closing the wealth gap will require many targeted solutions.      

It also was clear from the discussions that geographic contexts matter. Racial wealth disparities are more concentrated in areas with historical disinvestment, like urban neighborhoods, or with a history of resource extraction, like rural communities where local economies are underperforming. 

More programs are needed to help older people from racially and ethnically diverse groups prepare to transfer wealth.

Recent AARP research found that “[m]ore than nine in ten (93%) adults 50-plus say that it is important to them to have an updated legal document such as a will that explains who they would like to receive their assets after they die,” but “just half (51%) of adults 50-plus say that they currently have a legal will.” 

This research also found that “White, non-Hispanic,  adults and Asian American, Native Hawaiian, and Pacific Islander adults are more likely than Black adults and Hispanic adults to have a will.” While managing wealth and creating succession plans are complex processes for any family, the racial disparities in this data and in recent research by the Center for Retirement Research at Boston College reflect concerns expressed by business and community leaders in each roundtable discussion: Reliable financial planning advice and resources are often hard to access in diverse communities.

Participants also shared how property locked in probate court, commonly referred to as heir’s property cases, disproportionately strips generational wealth from communities of color. It was felt that many heir’s property cases could be avoided with access to affordable estate planning and financial advice. It’s also the case that limited financial education and support programs leave older adults vulnerable to scams, and they are regularly targeted as victims. Incidents of wealth-stripping fraud around housing, financial products, and legal services are all too common.

Capital access is essential to wealth building within racially and ethnically diverse communities.

For diverse communities, a lack of access to capital is a major constraint, and roundtable participants highlighted two key areas where capital could accelerate wealth building: housing and business investments. 

While participants felt that incentive programs and support for buyers were vital, they were not sufficient to address the current housing affordability crisis. For those who already own a home, limited access to capital can prevent them from renovating and improving homes, causing properties to be undervalued and reducing overall wealth. 

Diverse communities would also benefit from greater access to capital for business investments. New business starts are high in these communities, but limited resources inhibit companies’ ability to scale and grow. Community financing has a role, but much more could be done.   

The rising costs of long-term care and healthcare are reducing wealth.

For families that have accumulated wealth, the skyrocketing costs of healthcare, especially long-term and end-of-life care, can quickly reduce those holdings, leaving less to pass on to heirs. Another frequently cited issue was Medicaid Estate Recovery – states recouping costs for long-term care through Medicaid – which has been problematic for diverse communities. In some cases, it can result in the government taking possession of a family’s home.

What’s Next? 

The intergenerational wealth transfers expected in the coming decades highlight the massive disparities between Americans with significant wealth and those who will have little to leave behind – and the persistent racial wealth gaps diverse communities face as a result.

As our roundtable discussions made clear, the first step toward resolving those disparities is to support wealth-building strategies where they are needed most. Helping people understand how to transfer wealth to heirs is vital, but it must be part of broader wealth-building initiatives. 

AARP will continue to build on the conversations we’ve had so far, expanding partnerships and insights that will impact how we reduce racial wealth disparities as people age.