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I'm interested in how shrinking populations may impact generational wealth. In past generations, where it was common for a successful person to have six, seven
by nostromo 8y ago
I'm interested in how shrinking populations may impact generational wealth.
In past generations, where it was common for a successful person to have six, seven, or eight heirs, even a large inheritance was quickly dissipated over a few generations.
In a shrinking population, the opposite is true. A single child often inherits the wealth of two working adults. And childless couples will commonly leave anything remaining to a niece or nephew. This could have a consolidating effect on wealth distribution.
- spaceflunky 8y agoI see this happening in the US now. For example with homes, when grandparents died in the 80s/90s a home was sold at a modest value and split among 3-5 heirs. Which amounted to very little per family after taxes. Nowadays you have millennials set to inherit homes that are overvalued in the $1MM+ range and split among 1-2 heirs. Which can be a life changing sum of money. I personally know of people who feel little pressure in their lives because they know they stand to inherit a $1.5MM home plus whatever else their parents have at some point in their life.
- mirimir 8y ago> I personally know of people who feel little pressure in their lives because they know they stand to inherit a $1.5MM home plus whatever else their parents have at some point in their life. Unless said parent(s) get clever with reverse mortgaging, and spend all the cash on travel or whatever ;)
- ryandrake 8y agoGrossly generalizing a whole generation, but chances are, those Baby Boomer parents were in debt up past their eyeballs, and that $1.5MM home is going to get sold along with all their other assets in order to square everything up. This generation may be having fewer kids, but it's going to be leaving fewer net assets behind.
- mirimir 8y agoI gotta say that one of my goals in life is to maximize my debt at death :) It's a delicate thing, of course, because dying with no cash or credit would suck. But hey.
- deleted 8y ago[deleted]
- ars 8y agoBe very careful. Elderly without children to check in on them are seen as ATM's. Extract as much money as possible and don't care about the person. Drug them so they don't complain, and schedule as many medical procedures as possible. Use providers that give you kickbacks, and charge very high rates for things like haircuts, or even drug delivery (why buy in advance, when you can deliver, and charge for it, that same day). All this changes when they have children who check in on them, ideally every day. > because dying with no cash or credit would suck. That all depends on if you retained your mental faculties until the end. If yes, you are going to want lots of cash! You will need to pay someone to do so many things you used to do yourself. If no, then any remaining cash will rapidly be taken from you anyway, so there's no point in holding on to it. My advice? Have children and love them. You will be much happier as an elderly person if you do that.
- mirimir 8y agoYes, those are all valid concerns. But I'm not the trusting sort. I have guns, and I know how to use them. And I'm planning to kill myself before I lose it completely. I have a cache of morphine and phenobarbitol. So maybe I'll die alone, but with luck, not exploited.
- ars 8y ago> And I'm planning to kill myself before I lose it completely. This is a common plan, but it doesn't work. When that moment arrives when you would want to, you no longer have the mental faculties to do it. Before then, you'll be feeling like everything is going just fine, so why end it? Assisted suicide or DNR's don't really work without family members to enforce them. Medical providers are incentivized to keep you alive: Both morally and financially (you can chose which counts for more depending on how cynical you are, but either way the two motives are in sync).
- sandworm101 8y agoOr they give it to charity to spite thier kids. There is no reason to assume that elderly people plan on giving anything to thier children. The days of that societal norm are long over.
- electriclove 8y agoAnd with people living longer, much of this wealth won't be just parent to child but also grandparents to grandchildren in roughly a 1:1 ratio. 4 grandparents wealth going to 4 grandkids
- alkonaut 8y agoI thought ppl sold their homes at around the age where they can no longer clean and walk stairs, and spent the lot travelling or just paying for living in some home for the elderly. At least that's what my parents did :D
- lotsofpulp 8y agoI doubt there is a significant portion of Americans with parents who have $1M+ mortgage-free houses. Maybe a few in CA and the other hotspots in the west and around DC, but most people are not set to make any life changing amounts of money from their parents dying.
- Swizec 8y agoI bet you that if you asked those people they’d tell you inheriting $100k would be a life changing event. Life changiness scales with your environment.
- jpindar 8y agoHere in the HN bubble, $100K is pocket change.
- mrhappyunhappy 8y agoCan I be in the bubble please :)
- shados 8y agoIt doesn't have to be a significant portion...just a visible one. Think of all the people who work in tech or other high paying professions and own places in NYC, Boston, SF, etc. A lot of them don't have kids, or have at most 1, maybe 2. These are homes that the kids may want to keep rather than sell, locking the "wealth" within a family.
- nshelly 8y agoAnd in California, they (and their children) can also inherit the low tax basis from when their parents bought the property. Thank you Property 13.
- icantdrive55 8y agoAgain with the Prop 13? I'm about to give up, and let history repeat itself. Yes--if an child inherits a house, they can inherit the property tax their parents paid, if they fill out the paperwork within 120 days-- I believe. Multiple children usually inherit the family home, with the eventual angry sale. The home goes back on the market, and full property taxes are paid. Most kids aren't inheriting mansions. The're usually track houses in need of repairs. Most of the kids had blue collar parents, and never thought their bungalow would be worth a million dollars. It's really getting old. If the younger set had any idea how politicians wasted that Prop 13 money; we wouldn't be blaming our current problems on Prop 13. Blame your boss who who just has to live in the best neighborhood, with the best climate. I guarantee if Prop 13 was repealed REITS, rich foreigners, and Zuckerburg types would swoop in and buy up most of the stock, and rent it back to employees. Person who didn't see their dad crying at the dinner table, "But at least we would have more tax money?". Look at how your county spends your property taxes now; Not so good?
- Someone 8y agoIf the population decreases, the values of many of these homes will decrease fairly rapidly.
- toomuchtodo 8y agoPeople will always want to immigrate, creating a demand floor.
- Someone 8y agoPotentially a very low floor. If villages far away from major population centers die out, people may still want to immigrate, but those people may not be wealthy or willing to pay a decent sum. For example, one euro plus the commitment to renovate for $25,000 buys you a house on Sardinia https://edition.cnn.com/travel/article/ollolai-italy-one-euro-homes/index.html https://edition.cnn.com/travel/article/ollolai-italy-one-eur...
- deleted 8y ago[deleted]
- coldtea 8y ago>In a shrinking population, the opposite is true. "Fortunately" we also have the shrinking working and middle class fortunes to counter-balance that. Passing on more generational wealth will mainly be a problem for the rich...
- sandworm101 8y agoBut people are living far longer into retirement, by which point much of the money is spent. People save while young, and buy healthcare when old.
- jdietrich 8y agoMost aristocracies practiced primogeniture to prevent this sort of dilution - the entire estate was inherited by the eldest son. America intentionally abolished primogeniture, precisely to prevent the perpetuation of the aristocracy or the creation of a new one. https://en.wikipedia.org/wiki/Primogeniture https://en.wikipedia.org/wiki/Primogeniture https://en.wikipedia.org/wiki/Fee_tail https://en.wikipedia.org/wiki/Fee_tail https://www.jstor.org/stable/2953276 https://www.jstor.org/stable/2953276
- Dylan16807 8y agoThis is a bit confusing to read, but I think what you mean is that America abolished the way to enforce primogeniture on your descendants? But you could still have a custom where each generation voluntarily wills their estate to a single child.
- adventured 8y agoThat is indeed the case, you can fully legally do anything you wish with your assets in death, including giving it to one child (or pet). Granted, it's also not unusual for lawsuits to fly if you leave everything to one child rather than spreading it out. That happens from time to time with the super wealthy in cases of feuding. In the US it became custom to more or less equally distribute assets in death to all of the children, rather than concentrating it to one controlling heir. That's still the overwhelmingly common custom to this day.
- Dylan16807 8y agoEven with a very fast rate of halving the population every generation, to effectively consolidate wealth then each generation has to not even spend most of the money they inherit. You need pretty huge amounts before that starts to happen, so the consolidation effect would be limited to a very small porion of the population. Are the set-for-life rich's birthrates even following the same trend?
- SenHeng 8y agoIn Japan anyway, unless the deceased left a will, the assets are split between spouse, children, then other living relatives (in that order)[0]. If the estate is valuable (ie. a large land plot in Tokyo bought before the boom years), the heirs often can't afford to pay the hefty inheritance tax and thus the property is sold and then subdivided. [0]: http://www.retirejapan.info/blog/japanese-inheritance-taxes http://www.retirejapan.info/blog/japanese-inheritance-taxes