Baby Boomers’ Wealth Provides A Generational Opportunity
New Zealanders are set to inherit $1.6 trillion over the next 25 years as Baby Boomers pass on their wealth to the next generation, according to JBWere’s Bequest Report 2025.
It’s a staggering figure and represents just one small nation in the South Pacific. The same scenario is playing out right across the globe. Baby Boomers are the wealthiest generation in history and have accumulated assets faster, and on a larger scale, than their parents did and their children ever will.
They were fortunate to enter adulthood during post-war economic growth. With rising wages, affordable housing, and accessible education, they have benefited from decades of property and sharemarket booms. Combined with favorable tax and credit conditions and a longer life expectancy, Baby Boomers have built wealth through compounding asset gains in a way that previous generations never could, and later generations are unlikely to repeat again.
Planning Ahead
Intergenerational wealth transfer is common in Europe and America but as a relatively young country, most New Zealand families have never faced this issue before. More Kiwis are now thinking about how to ensure their hard-earned wealth is passed on in a way that empowers the next generation to continue the good work and make smart decisions that won’t result in inheritances being fritted away.
Warren Buffett’s famous quote definitely springs to mind: “Someone is sitting in the shade today because someone planted a tree a long time ago.”
Some high net worth families establish companies with a CEO and a full board to manage and grow their assets. However, a family trust or family company are other common structures which people often turn to.
People sometimes worry about liquidity and want a quick exit strategy to be available in the event of their death. But many Baby Boomers will have enough assets and cash in the bank that their children are not going to want, or need, to sell everything straight away.
So where might commercial property investment fit into this picture?
Future Benefits
One smart way to preserve intergenerational wealth is to look for a long-term investment that provides a regular cash return plus good growth potential. Commercial property can provide an ideal platform for anyone looking to provide a family structure for the next generation to step into.
Owning a share of a successful retail or industrial development, medical facilities, high quality office space or prominent buildings can help set your family up for generations to come. These assets will likely appreciate significantly over time, yet will provide a regular income stream for your immediate successors to enjoy and benefit from.
Many investors are now beginning to realise the responsibility – and incredible opportunity – that comes with transferring wealth from one generation to the next. Being conscious of, and considering, all your options carefully is a good place to start.
If you have any questions or would like to know more about how commercial property investment could form part of your succession planning, feel free to get in touch.
- Email: owen.cooney@classiccollectives.co.nz
- Phone: 027 222 6932
