The Great Wealth Transfer Has Been Pegged at $105 Trillion. One Study Says That’s an Overestimation

The size of the so-called "great wealth transfer" is once again under debate after a new analysis suggested far less money may actually end up in the hands of heirs than widely cited estimates have projected.

A new report from Visa Business and Economic Insights estimates that $36 trillion in baby boomer wealth will be transferred to Generation X and millennials over the next 20 years. That figure is dramatically lower than the $105 trillion estimate from wealth research firm Cerulli Associates, which projects transfers from older generations to heirs and spouses through 2048.

Visa said its research was designed to estimate how much inherited wealth will actually become available for everyday consumer spending, rather than measuring the total amount of wealth that changes hands.

"We wanted to go through and inspect how much money will actually be spent," Wayne Best, chief economist at Visa, told CNBC. "A lot of people think about the $93 trillion or $124 trillion and think, 'All that money's going to be available for spending; this is going to be incredible.'"

Visa began its analysis with an estimated $93 trillion in wealth currently held by baby boomers. From there, the company adjusted the figure to reflect what it believes will realistically be passed to heirs.

The report subtracted approximately $5 trillion in liabilities, including mortgage debt, along with $28 trillion held by the wealthiest 1% of Americans. According to Best, ultra-wealthy households spend differently from most consumers, often purchasing assets such as yachts and private aircraft rather than making the kinds of purchases that broadly influence consumer spending.

"They don't spend like the rest of us," Best said. "They're buying yachts and airplanes." Visa also deducted an estimated $16 trillion that boomers are expected to spend during retirement, reflecting longer life expectancies and higher spending patterns than previous generations. Another $8 trillion was removed to account for taxes and charitable giving.

After those adjustments, Visa concluded that only $36 trillion would ultimately be transferred from boomers to younger generations over the next two decades. The report estimates that $28 trillion of that inheritance will remain in savings and investments, while only about $8 trillion will be spent.

Those consumer expenditures are expected to flow primarily into housing, automobiles, travel, and retail purchases. "You know, $8 trillion in spending is nothing to sneeze at," Best told CNBC. "It's a significant amount of money."

Cerulli Associates, however, argues that the broader picture is much larger because its analysis includes wealth transfers across all generations through 2048, not just baby boomers. Its latest forecast estimates roughly $124 trillion in transferable wealth, with about $18 trillion ultimately directed to charitable causes, leaving approximately $106 trillion flowing to heirs and surviving spouses.

According to Chayce Horton, Cerulli's associate director of wealth management, much of that wealth will remain concentrated among affluent households, making the greatest impact on the financial services industry rather than consumer spending. Cerulli estimates that roughly half of the more than $100 trillion expected to change hands will come from high-net-worth and ultra-wealthy families.

The firm also projects that about $4 trillion will initially pass to surviving spouses, most of them women, before eventually reaching children and other heirs. "When you look at that demographic, on average, spouses are a couple years younger, and those spouses live a couple years longer," Horton told CNBC.

Cerulli expects Generation X to receive the first wave of inheritances, collecting approximately $14 trillion over the next decade. Over the longer term, however, millennials are projected to inherit the largest share, with an estimated $46 trillion over the next 25 years. Generation Z is expected to receive a growing portion in later years.

For wealth managers, Horton said, the transition highlights the importance of building relationships not only with current clients but also with their spouses and future heirs. "The focus of our report... is understanding where the wealth is today, and where that wealth will be moving tomorrow so the wealth and asset management industry can adapt," Horton told CNBC.