Study: Gen Z and millennials plan to use inheritances to invest, pay off debt

What would you do if you inherited a significant chunk of cash? With baby boomers projected to pass down over $84 trillion to their heirs over the next two decades in what’s called the “great wealth transfer,” those fortunate enough to receive a hand-me-down windfall will have to decide how to use it.

We surveyed Americans between the ages of 18 to 42 in November 2023 to determine what percentage of millennial and Gen Z adults expect to receive an inheritance, what percentage won’t be as lucky, and how this outlook impacts their plans for the future. 

We also asked younger Americans about the responsibility of caring for their aging parents — which for some respondents is already a reality.

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Key findings

• 68% of millennials and members of Gen Z have received or expect to receive an inheritance.
• Inheritors expect to receive nearly $320,000 on average.
• 76% of those receiving an inheritance plan to save or invest it.
• 40% of those receiving an inheritance plan to pay off debt. Of those currently carrying more than $10,000 in debt, 69% expect an inheritance that will wipe it away.
• 92% of those receiving an inheritance don’t plan to donate any of it.
• 33% of survey respondents expect to or already are financially supporting their parents.
• 57% of millennials and members of Gen Z believe the great wealth transfer will perpetuate inequality.

Younger generations expect a significant inheritance from the great wealth transfer

One of the primary reasons baby boomers’ wealth ballooned over the past several decades lies with home ownership. Home values have increased nearly 500% since 1983, when the first wave of boomers bought their first homes. When you also factor in investment growth, higher incomes and lower debt levels than their offspring, boomers have had the benefit of time and more favorable economic factors in which to increase their riches. 

As such, it is estimated that some millennials and Gen Zers stand to inherit roughly $320,000, which is actually lower than the cost of the average home in the U.S. of $431,000 (according to U.S. Census Bureau and U.S. Department of Housing and Urban Development data for the third quarter of 2023). 

Types of assets young Americans expect to inherit

As younger generations plan for the future, it’s not just cash they’re expecting. Of the millennials and members of Gen Z expecting an inheritance, 62% expect to receive real estate. Other commonly expected transfers of wealth include cash, vehicles, investments and other property. Here’s the breakdown of what young American anticipate they’ll receive:

• Cash: 82%.
• Real estate: 62%.
• Vehicle: 41%.
• Investments and ownership stakes: 32%.
• Other property: 19%.

Many people expecting smaller inheritances

It’s worth noting that even though $320,000 was the average expected inheritance value, a majority (84%) of survey respondents getting or expecting an inheritance anticipate receiving amounts of over $100,000 or $200,000. Meanwhile, 15% expect amounts over $500,000 and 6% expect upward of $1 million.

Saving, investing and paying off debt are top plans for inherited wealth

When faced with the prospect of a generous windfall, 40% of respondents said they would pay off debt, with 69% of those with more than $10,000 in debt saying an inheritance would clear their obligations. 

Student loan debt among millennials and Gen Z comprises roughly 36% of the $1.63 trillion of federal student loan debt total in the United States (though Gen X owes the most at almost 57%), according to a 2023 report from the Education Data Initiative. 

Credit card debt is another burden weighing down the lifestyles of younger generations, with the average credit card debt being about $5,649 for millennials and about $2,854 for Gen Z. 

Learn more: Best credit cards

However, almost 76% of survey respondents expecting an inheritance said they plan on socking away what they get for the future and almost 20% said they would pay off their mortgage. 

Majority say looming inheritance does not change their lifestyle

Despite having a windfall that has the potential to relieve a lot of financial stress, a majority of respondents insist that it won’t change their lifestyle much at all. 

Of those who say an inheritance will impact their lifestyle, 33% stated they’d be less stressed (perhaps due to using the money to reduce debt), while approximately 48% said they’d be more relaxed when it comes to saving and earning money. 

Most inheritors aren’t planning charitable donations

Where heirs won’t be spending much of their newfound wealth is on charities, with only about 8% of respondents saying they intended to donate any inheritance funds.

Historically, baby boomers have placed a high value on charitable donations. About 72% of baby boomers donate to charity and they support on average 4.5 charities, while about 60% of millennials donate and they support an average of 3.3 charities, according to The Next Generation of American Giving report released by the Blackbaud Institute in 2013.

Many expect the great wealth transfer to perpetuate inequality

With wealth inequality having increased by roughly 20% from 1980 to 2016, according to Pew Research — as growth in income has favored upper-income households — it’s possible the great wealth transfer will continue this trend. 

For example, according to the New York Times, the wealthiest 10% of households will benefit from this transfer the most. In particular, the 1% at the top of that wealthy slice of society will be transferring the most, and those households are predominantly white. 

About 57% of our survey respondents, including approximately 54% who have or expect to receive an inheritance, say they believe the great wealth transfer will perpetuate wealth inequality in the U.S.

One in three respondents expect to financially support aging parents

As not all boomer parents are fiscally sound and prepared for their golden years, their grown children may end up shouldering the burden. A full third (approximately 33%) of survey respondents say they expect to or already have taken on a financial burden to support aging parents. However, just a third of that group say their financial planning and spending behavior includes saving to prepare for supporting their parents.

Meanwhile, roughly 15% of total survey respondents in order to support aging parents have taken on debt (or expect to). 

Of respondents supporting parents or expecting to, just under a third said they sometimes feel resentment that their parents aren’t in a better financial situation.

Adults in their 40s are most likely to be caught in the “sandwich generation” of both raising children under the age of 18 and having parents over the age of 65. As their children become young adults and as their parents’ health declines with age, this group may find themselves not only helping out their adult children financially, but also their parents. 

Tips for paying off credit card debt quickly

If you’re not one of those who anticipates wiping out debt due to a wealth transfer, you still need to have a financial plan. Here are some tips to help knock down balances you may be carrying.

Use a balance transfer credit card

A balance transfer card offering a 0% intro APR for a specified period of time will allow you to devote 100% of your payments to the principal of the debt — instead of the principal plus interest charges.

Since interest charges can quickly inflate what you owe if you don’t pay off your credit card balance in full every month, getting a reprieve from those charges can help you pay down a large balance more quickly. Some balance transfer cards offer a 0% intro APR for almost two years (just know you’ll typically pay a balance transfer fee).

One of the top options on the market is the Wells Fargo Reflect® Card * The information for the Wells Fargo Reflect® Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. , which offers a 0% intro APR for 21 months from account opening on purchases and on qualifying balance transfers made within the first 120 days, afterwards a 18.24%, 24.74%, or 29.99% variable APR applies. There’s a balance transfer fee of 5% with a $5 minimum.

Such cards typically require good to excellent credit to qualify.

Open a debt consolidation loan

A debt consolidation loan can provide a longer payoff period of several years compared to a balance transfer card. Plus, the interest rates on loans can be lower than what you are currently paying on your credit card — and you can consolidate multiple credit card balances into the loan.

With a debt consolidation loan, you’ll have a fixed monthly payment during the life of the loan and the loan amount may be considerably higher than what you’d get with a balance transfer card’s credit limit. 

A balance transfer card may be better for someone who can aggressively pay off debt and zero off their balance within a year to two years. However, using a personal loan to pay off credit card debt is likely a better choice for someone who needs longer to pay off debt, even though you won’t be able to fully avoid interest charges.

Applying for a personal loan may also be the better option for someone whose credit score isn’t quite high enough to qualify for the best balance transfer cards.

Consider the debt snowball or debt avalanche method

While balance transfer cards and debt consolidation loans are good tools for getting out of credit card debt, there are two popular debt repayment strategies you can employ to clear out those balances — particularly when you have multiple balances across several credit cards.

Debt snowball: The snowball method allows for quicker wins as you focus on paying down the card with the smallest balance first. You list out all your credit card debts in order of the smallest balance to the largest. You’ll then want to devote larger payments (more than the minimum payment due) to the card with the smallest balance, while continuing to make just the minimum payments on the other cards to remain in good standing. 

Once the card with the smallest balance is paid off, you’ll then employ the same strategy to the next card and so on until you’ve paid them all off. The only way this will work effectively is if you stop adding to your card balances every month — but working your way toward a $0 balance card by card can give you the motivation you need to keep going.

Debt avalanche: The debt avalanche method takes a slightly different approach. Instead of making a list of your card’s balances from lowest to highest, you’ll list out your cards according to their APRs — from highest to lowest. 

You’ll then want to make bigger payments on the card with the highest APR first, which can help you save money on interest charges. Again, you’ll continue to make the minimum payments on the other cards until the balance on the highest-APR card is paid off. Then, you’ll move down the list to the next card with the second highest APR and repeat the process until you’ve paid down all your balances.