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The great wealth transfer reality check
- mikestew 2mo agoDespite TFA coming from Visa, of all places, I found it to be a read worthy of my time. Basically, inheritances might not be as large as one might suspect, and the all that "inheritance spending lift" might already be happening (my parents are blowing my inheritance). I might take issue with the conclusion at the very bottom that GenX and Millenials are ahead of Boomers on a capital per-capita basis. That might be true, but (for example) when this youngest-of-them Boomer bought his first house, housing was much more affordable. So it's not like the "kids" are necessarily spending their money on the fabled avocado toast (a dish this Boomer enjoys very much, thank you).
- skybrian 2mo agoIn many places you couldn't even buy "starter houses" like they had anymore. They wouldn't meet modern building codes. When people do manage to buy a house, it will likely be a nicer one.
- SoftTalker 2mo agoIt may look nicer, and have more features, but it's probably not built any better. Older homes were built with copper plumbing, plaster walls, solid hardwood floors, wood trim, and plywood subfloors, roof deck, and sheathing. New homes use PVC or PEX pipes, drywall, OSB (basically glued-up wood chips) instead of plywood, laminate floors, and plastic or styrene trim. The only things really better today are insulation and wiring.
- alephnerd 2mo agoIn California, a big difference is earthquake retrofitting. Older houses often aren't retrofit until sale, and retrofitting is expensive. Also, I've noticed newer houses (2000s-present) are airier and have more natural light compared to older (pre-90s) houses.
- lisper 2mo agoNewer CA homes also tend to do better in fires.
- Jtsummers 2mo ago> Also, I've noticed newer houses (2000s-present) are airier and have more natural light compared to older (pre-90s) houses. This depends a bit more on the specific era of the home, rather than just being pre-90s, but it's particularly present in 1970s housing stock. The energy crisis led to a style of home design that favored small windows (energy efficient windows weren't yet really a thing, or at least not widely available at affordable prices) with lower ceilings. After the energy crisis through the 80s things started opening up again, and then improvements in insulation and windows (for two specific features) and improved efficiency in AC units led to a further opening up of home designs (with larger windows, higher ceilings) through the 90s and to today.
- SoftTalker 2mo agoYeah, go back to 1950s or earlier and you are into the pre-AC era, houses had big windows, big covered porches, and higher ceilings.
- loeg 2mo agoThe new building methods and materials are genuinely better. (Criticizing OSB and glazing plywood is crazy. They're both just composite wood products. OSB is totally fine for what it's used for.)
- SoftTalker 2mo agoHaving seen OSB fall apart when it gets wet vs plywood which can delaminate but is still solid wood, I would disagree. OSB works if you can ensure it stays dry.
- cucumber3732842 2mo ago>OSB works if you can ensure it stays dry. Plywood is getting to be almost as bad. The glue changed and got categorucally worse 10-20yr ago.
- Danox 2mo agoNot better just faster to put up, all those expensive cheap track homes and luxury apartments going up they are not made or built better not by a longshot.
- loeg 2mo agoFaster and cheaper to put up is better! Modern insulation is more comfortable and saves you on utility bills; modern electric is safer and supports more usecases; it's easier to attach things to drywall walls than plaster; etc, etc, etc. "The old ways were better" is rosy retrospection.
- Kirby64 2mo ago> New homes use PVC or PEX pipes, drywall, OSB (basically glued-up wood chips) instead of plywood, laminate floors, and plastic or styrene trim. PEX is better than copper. Drywall is better than lathe and plaster. Modern OSB like Advantech are just superior to plywood subfloors in every metric. Maybe the hardwood floors were better back then in some ways, but engineered hardwood or vinyl planks are superior in many ways over hardwood flooring. Better wear resistance, less shift with moisture/temp, etc. Most countertops are far superior these days, with wide availability of quartz, granite, etc. I’d say almost everything is built better at a minimum standard. You could always find poorly built houses back then, but the difference is there wasn’t even any rules often…
- hollerith 2mo agoIf drywall is better than lath and plaster, then why is lath and plaster still used today -- in high-end construction?
- Kirby64 2mo agoThe same reason many inferior materials are used in higher end goods: there’s some mystic that its superior for one reason or another, potentially aesthetically, and the higher cost is sometimes a draw by itself. There’s nothing you can’t achieve with drywall that you can with lath and plaster. There’s no reason ever to use marble over quartz designed to look like marble… but some people do anyways.
- garciansmith 2mo agoI disagree about drywall versus plaster, save for ease of repair. Maybe it's just in most cases you won't encounter the highest quality drywall, nor will the installation be well done and actually last even if, in theory, it could be done well. E.g., my 100+ year plaster is still there and totally fine save in high-moisture rooms, whereas my friend's 20-year-old house has screws or nails starting to pop out of the drywall everywhere. I was speaking to an architect about this very issue a few weeks ago, and he also noted that there are also acoustic properties to plaster and lathe that make it much nicer for residences (and if you have an old home and can afford it, repair the plaster and don't replace it with drywall). Although maybe texture and acoustics count as aesthetics to you (same with real wood floors looking far better than vinyl). When it comes to materials used in residences, aesthetics matter to a lot of people.
- rayiner 2mo agoAt least in part, that's because the positional status of "many places" has changed dramatically. We have a growing population with a high degree of internal mobility. That means that places don't stay in a fixed position on the product lineup. Santa Clara County today isn't Santa Clara County in 1990. It's more akin to what Beverly Hills or the Gold Coast were in 1990.
- cucumber3732842 2mo agoThose places who got rich wrote laws for the whole state in the intervening time. In 1970-whatever if some poor mill town on the outskirts or some exurb didn't want to play by the rich big citys rules they didn't have to. They could allow street after street of garbage starter homes on postage stamps with nary a fuck about muh stormwater. These days they'll be fined by the state, lose their grant funding, etc, etc. if they did that.
- michaelt 2mo agoAt least in my area, the price of the land is a huge fraction of the value of a house. Imagine a house-sized plot of land costs $250,000. That means a builder can offer buyers a $20,000 building for $270,000 or a $150,000 building for $400,000. And in the latter case, the buyer gets 7.5x the building for 1.5x the cost.
- mae3x 2mo ago"my parents are blowing my inheritance". Really? It is their money, not yours. I think you mean, "my parents are spending down their savings."
- beepboopboop 2mo agoI read that as an observation rather than commentary on who the money belongs to.
- mikestew 2mo agoI meant when I wrote. I just might not have meant it as seriously as you seem to think.
- epistasis 2mo agoIt is a very good read. And my only difference in option is that I think Visa of all places would be very knowledgeable about spending and where it all goes. They have an absolutely vast amount of information about how money flows in the economy, and an interest in finding out where it will flow in the future, and when.
- dsauerbrun 2mo agoThey have the data but I wouldn't trust their analysis of it unless they release all the raw data which would be to the benefit of their competitors.
- rlucas 2mo agoThis piece is very much not sourced from payment rails transaction data. It's big demographic and macro data and the sources are all nicely cited
- rayiner 2mo ago> That might be true, but (for example) when this youngest-of-them Boomer bought his first house, housing was much more affordable. I think my fellow millennials are overlooking something in our complaints about housing prices, which is that the positional status of neighborhoods doesn't stay constant. There's a good chance that the neighborhood you fondly remember growing up in was much less desirable in relative terms than it is today. My wife and I, for example, bought a house 10 years ago. In that time, the value has easily doubled, growing far faster than wages or inflation. But it's also a completely different product today. 10 years ago, we were young parents willing to make a lot of compromises to get a house on the water. Pre-COVID, the commute was 1:15 minutes each way, 5 days a week. The house next door was a tear-down with a tree growing in the living room. The other houses on the street were small cottages from the 1920s. Today, half of them have been torn down, rebuilt, and filled with more affluent neighbors. If my kids grow up and say, "I have a professional job, why can't I afford a house like you guys did?" A big part of the answer is: we couldn't have afforded to live in their neighborhood at your age. We bought our house in a completely different neighborhood.
- atleastoptimal 2mo ago80% of the GDP over the next two decades will be siphoning money out of baby boomers (medical care, retirement homes, luxury cruises) before their children see a cent of it. Coupled with AI taking everyone's job, the end result is neo-feudalism where familial dynasties call all the shots.
- hotelsacher 2mo agoWhy is it that every time I see the term "baby boomers" used here, it looks like a slur? Is it just ageism or did they do exceptionally terrible things?
- alephnerd 2mo agoNot all households are as dysfunctional as the ones you described. And there's a reason why trust and wealth planning has becoming increasingly common. And while I am optimistic about AI's capabilities and am by no means an AI Luddite, assuming AI will take all jobs in the near future is ludicrous.
- cyanydeez 2mo agoI think youre confusing "defacto" job loss and "replacement" job loss. Defacto job loss is: Your boss thinks you're replaceable with AI, and he fires you then puts the other workers implicitly responsible for your workload, _regardless of AI's capability. Replacement job loss: AI actually does 100% of your work load. Defacto jobloss is the insideous love child and will definitely accelerate because the "unwoke" mind virus rich people have that people are all replaceable, useless and "takers" as elon calls it. Workers will put up wiht it because they need a job under neofeudalism.
- alephnerd 2mo agoAnd that isn't how or why layoffs are happening as someone who has made those calls. AI is being used as a scapegoat, but a lot of this is just rightsizing of headcount as I've previously mentioned on HN. Right before GPT-4 we were using COVID as that scapegoat in 2023.
- voxleone 2mo ago[dead]
- paulpauper 2mo agoGen X and millennials are ahead of boomers on per capita wealth at the same age This runs counter to the popular media narrative of poor millennials, but it makes sense. Millennials rose a tailwind of surging stock prices since the '09 bottom, fat white-collar salaries (such as in tech, consulting, finance), and surging home pries, buoyed by cheap mortgages from 2010-2022 thanks to 14 years of near-zero interest rates. Even when taking into account student loan debt, white-collar workers still earn much more compared to in the 70s-early 2000s. 6 figure salaries for white-collar jobs were uncommon even in the early 2000s whereas they are commonplace today.
- add-sub-mul-div 2mo agoEverything that can be done is being done to ensure that white-collar labor transitions from skilled workers to low-cost fungible operators of AI. Even if no further jobs are lost it will be a massive hit to the average salary.
- sokoloff 2mo agoWhy do you think it will be low cost operation rather than highly paid specialized talent (but only very few of them)? If AI becomes a widespread job displacer, I think we’re going to see an amplification of the value of talent. If you think there’s 2x or 10x talent now, you might find there’s 10x or 50x talent with AI.
- nullorempty 2mo agoI think it's reasonable to expect amplification but I am not sure how reasonable it would be to expect sustainable amplification. I feel that AI removes the meaning from work and with that gone we eventually start loosing the talent. And 0 talent by 10 ( or even 50 ) is a fucking 0!
- nullorempty 2mo agoLet's not assume that 6 figure salary is close to 999,999. In reality it's closer to 100,001. And when you factor in inflation and increased housing cost the comparison starts to differ greatly. Millennials have it pretty tough.
- KwisatzHaderack 2mo agoAg, so it’s not really “eat the rich” but “eat the boomers”.
- tonymet 2mo agoRead about revolutionaries, they really don’t care who they eat. Be prepared to be involuntarily labeled a boomer
- FloorEgg 2mo agoWhen certain people are convinced that all wealth and success are only achieved through exploitation, then it's easy to lack empathy and consideration for anyone more wealthy or successful than them.
- tonymet 2mo agoit only takes a concerted group to convince the rest (I'm talking about history not virtue).
- quentindanjou 2mo agoThe article says the exact opposite. Wealth isn't with boomers: it is with rich boomers, pointing the high mortgage and debt that a lot of boomers have. And they explain that the wealth is going to stay and be kept by these rich families (which will invest and not spend).
- citizenpaul 2mo agoWhat is shocking to me is how can so many boomers still have a mortgage? They could buy a house when you could easily get one for <10 years of salary almost anywhere. You basically had to try not to pay off your mortgage, then constantly borrow against it. >plant to do a Skip gen trip? I have no earthy idea what this could mean but they just casually drop it in there. Thats how you can tell what social class you were born into. I had a school friend whom's grandparents were one of these in the list it seems. The bought him a 3bed/bath house in the suburbs. He proceeded to do coke for the next 10 years and be a burnout,.but all good because he still has a nice house to live in while being a detriment to society. Yeah I'm bitter so what?
- alephnerd 2mo agoMy parents are not boomers (they're Gen X), but kept their marginal mortgage because the capital they would have used to fully pay off the mortgage could be better deployed in a mixture of investments. A lot of households have done something similar. Additionally, not all households bought their first house in their 20s - plenty of households did so in their 30s and 40s. > They could buy a house when you could easily get one for <10 years of salary almost anywhere And during that era, you had double digit interest rates [0] [0] - https://www.statista.com/statistics/1338105/volcker-shock-interest-rates-unemployment-inflation/ https://www.statista.com/statistics/1338105/volcker-shock-in...
- inigyou 2mo agoMaybe they all got houses when the monthly payments were affordable.
- bluGill 2mo agoI've seen a lot of people do can put refinances instead of paying the house off. I recall one friend looked at the deed on the new house he bought (10 years ago) for 250k. The previous sale was for 90k, but we could see every refinance over the years, they owed 235k when it was sold. Probably lived a nice life in between with nice vacations but no savings.
- Jtsummers 2mo ago> >plant to do a Skip gen trip? > I have no earthy idea what this could mean but they just casually drop it in there It's defined in the paragraph above the image you misquoted: > Skip-generation trips, where grandparents travel with grandchildren without their parents, are a clear example of how the wealth transfer is not just about money. These trips turn wealth into time together, shared memories and a way to pass down values across generations.
- malfist 2mo agoThis whole premise is bullshit. They include the 1% in the wealth calculation, and then exclude it from the wealth transfer to say "see how much taxation is happening?" If you don't want to include the 1% in the second number, don't include it in the first number.
- vinaigrette 2mo agoI was equally stunt, but get this : Visa wants to know how much people are going to spend using their services. This is not a sound socio-economic analysis of the wealth transfer. I think overall few people read this type of report. Instead, it gives insight on a phenomenon that is expected to be an "event". They show that it's going to be gradual, that it already started. Maybe it is a way to inform potential investors in Visa ? Maybe it is a report intended for the business side customers (i.e. commerces) ? I don't know. Plus, it gives an interesting insight on how the "_real_" economy is still a topic of research where every discourse seem to be on financial performances. I found it interesting after having a repulsed reaction to what I considered a grossly irrelevant account of socio-economic dynamics of the so called "great wealth transfer" (horrible name), like you.
- loeg 2mo agoThey also hold disproportionate wealth. It is absurd to arbitrarily exclude them.
- tonymet 2mo agodon’t think of it as a setback, imagine the opportunity
- NoDodgeQuestion 2mo ago>baby boomers are sitting on at least $93 trillion in assets > $36 trillion in baby boomer wealth will pass to Gen X and millennial heirs over the next 20 years after subtracting liabilities, excluding the top 1 percent of households (the outliers in how they spend their wealth) Why the fuck would you be allowed to include top 1% in first number but not second? They are outliers, yes, so what?
- HWR_14 2mo agoThis is an article about how the 99% will spend all their money and their children will not inherit money. The 1% will not spend all their money. They are not who the article is about.
- NoDodgeQuestion 2mo agoIf the article is only about the 99%, why are the 1% included in the original 93T figure??
- AshamedBadger56 2mo agoKeep in mind these charts are almost useless if you're trying to determine how much the typical millennial or gen x person has compared to boomers. I'd go as far as to say it's misleading at best to portray "The kids are alright" and that "Gen X and millennial heirs are starting from a position of strength", when the charts used to back that up are based on net worth per capita, a very poor metric to use for this. They might as well say "A small portion of the kids, that happen to be in the top ~10%, are alright".
- anon7000 2mo agoYou’re right but they do at least say this: > by our estimate the amount spent will be smaller still at $8 trillion,* because most households receiving an inheritance are already affluent and likely to save or invest much of what they receive
- cucumber3732842 2mo agoIt's not even a "top few percent" thing. It's an exercise in creative measurement. A large fraction of the boomers were useless hippies for many years in their 20s so they were living hand to mouth, no assets. Everyone since went to work. The boomers when they did get serious quickly could afford houses got mortgages, putting them in the red for years. Everyone since has had to wait way longer to be in the red like that. So of course when you pause and take a static measurement it looks like generations since are "doing ok" because at whatever point you measure there's more of them banking assets to get to the next step.
- 0x262d 2mo agoRight, that was egregiously misleading. Well, I'm not sure how misleading it is because the average is a meaningless metric for most people's experience, so probably very.
- zhainya 2mo agoSo, the rich will keep getting richer? Is that about right?
- massysett 2mo agoHeh, I saw the title and the domain, and I thought it was referring to wealth transferred from poor to rich by all the credit card fees that merchants pay that are refunded to well-off cardholders through rebates. Poorer customers do not get lucrative rebates, it they use debit and get none at all.
- conorcleary 2mo agoa bank will offer free tablets to new accounts while grinding their existing clientele into the dirt.
- dgudkov 2mo agoWhile the article doesn't talk much about it, but the math in it implies that most of the wealth will be transferred to the government in the form of inheritance taxes. So yes, the great wealth transfer. Just not in the direction everyone presumed.
- ChiperSoft 2mo agoInheritance tax in the US currently doesn't kick in unless the estate is worth more than 12 million dollars. Sounds pretty fair to me.
- Eddy_Viscosity2 2mo agoIt's can also be circumvented entirely.