We in the toy and consumer products industries have experienced an unanticipated year of heavy consumer spending. For example, 2020 saw the first annual double-digit increase in toy sales in over thirty years.
But from where is all of this money coming? One answer to that question can be found in an interesting article by Wall Street Journal writers Ben Eisen and Anne Tergesen entitled “Older Americans Stockpiled a Record $35 Trillion. The Time Has Come to Give It Away.”
The authors dub it “The greatest wealth transfer in modern history” and assert that “At no time in modern history has so much wealth been in the hands of older people.” Americans over 70 years old now control 27% of the nation’s wealth.
Because those seniors are getting older, downsizing, and dying, they are giving their money away. Here is how the article puts it:
Now they have started parceling it out to their heirs and others, unleashing a torrent of economic activity including buying homes, starting businesses and giving to charity.
Baby Boomers have dominated the economy and culture as they have gone through their teens, early adulthood, middle-age and now senior years. The article tells us that over the next twenty years Boomers will transfer those dollars to Millennials and Generation X’ers.
Some recipients will save money; some will invest it and others will take risks. The authors state:
Inheritances and gifts can bring financial stability to some recipients, and for others can provide the freedom to take more risk—something data have shown drives a greater willingness to invest in stocks, and an increase in riskier work ventures, such as starting a business, that have the potential for bigger payoffs.
Here is what I think: Millennials are a financially cautious generation that has already suffered through the Great Recession and the global pandemic. They entered a stagnant job market with college debts they were unable to pay off. Many of those who could not find well paying jobs have been forced or chosen to be entrepreneurs.
Now, after a great deal of struggling, they will begin receiving inheritances and gifts that will allow them to pay off college loans and flex their economic muscle. They are a hard-working group who have been forced to become professionally and personally savvy.
Millennials and Generation X’ers don’t believe in waste and make choices based upon ethical values. They may just be the best group of people possible to manage the country’s wealth over the coming decades…and hopefully spend part of it on toys.