Generations are shaped by the events, technologies, and cultural shifts of their time. As we usher in the new year, we also welcome the start of a new generational cohort, Generation Beta or Gen Beta—those born between 2025 and 2039. They follow Gen Alpha, who were born between 2010 and 2024. A defining feature for Gen Beta will likely be the seamless integration of the digital and physical worlds. With the emergence of each new generation, there is always a discernible change in their cohort’s values and attitudes toward wealth. Let’s explore some of them.
Millennials & Gen Z
There will be a few decades before a member of Gen Beta requires estate planning, however, millennials (also referred to as Generation Y, those born between 1980 and 1994) and Gen Z (those born between 1995 and 2009) are reaching the stage in life where estate planning is especially relevant.
For Canadian millennials, a significant wealth transfer is underway; $1 trillion is set to move from Canadian baby boomers to their Gen X and millennial heirs by 2026, some of which is being transferred while the former generation is still living. Much of this wealth transfer is due to baby boomers cashing in their mortgage-free homes, selling off assets and ultimately passing their wealth to their children. Estate planning conversations with these cohorts often concern tax, probate, and general wealth protection planning to ensure the bulk of such wealth transfers are preserved.
On a global scale 80% of Gen Z live in emerging economies. Economic growth means they are richer, healthier, and better educated than previous generations in those places. Even in the U.S., Gen Z is much better off than baby boomers and millennials were at the same age due to greater household income.
Gen Z’s Values and Attitudes Toward Wealth
Displays of Wealth
While material wealth still holds importance for Gen Z—recognizing home ownership is out of reach for many living in metropolitan cities—there is also a greater emphasis on having curated experiences. For example, bespoke wellness treatments or travel that allows for unique experiences may be preferred over expensive personal items, including vehicles.
Approach to Work and Retirement
As a general trend, members of Gen Z are pursuing careers in engineering or computer programming rather than the humanities and attaining vocational qualifications giving them the upper hand in tight labour markets—consequently they are able use this as leverage to quit a job and find another one with the aim to increase their pay.
Roughly 9 in 10 Gen Zs say having a sense of purpose in their work is very or somewhat important to their overall job satisfaction and well-being. Consequently, while some may achieve financial independence and retire early, others may put more value in having the choice to continue working not as a necessity but because they have greater fulfillment from work.
Greater Interest in Investing
Younger generations are eager to start investing early, nearly 74% of Canadian Gen Zs ages 18 to 25 say they own at least one investment, compared to 56% in the U.S., 49% percent in the U.K., and 57% in China. Social media has fueled the curiosity of young investors educating them on different types of investment strategies with the goal of having a source of income outside of their jobs. Self-directed investment platforms and the emergence of various cryptocurrencies also allow Gen Z to start small and take greater risks with investments as they continue to learn and grow.
Non-Reliance on Inheritance
While millennials are benefiting from the great wealth transfer, because older generations are living longer, and the costs of living have increased there is a reduction in savings; many estates may be diminished by the time Gen Zs stand to inherit. This disparity means that Gen Z (as well as Gen Alpha and Gen Beta) may not be able to rely on the idea of an eventual inheritance to supplement their living.
Estate Planning Considerations for the Next Generations
While the well-being of an individual’s family and friends after their passing remains paramount, as estate planners we have a fascinating front-row seat to observe the difference in attitudes toward wealth as among different demographic cohorts.
The standard distribution (all assets to a surviving spouse and then equally divided among children) may no longer be relevant to younger clients who choose not to marry or have children. Instead, charitable donations or bequests for social benefit purposes, the inclusion of friends or nieces and nephews as beneficiaries as well as a fund for pets are increasingly common. Additionally, a multiple will strategy may now be more focused on having a separate digital will and a digital executor to manage digital assets such as cryptocurrencies and social media accounts/domains.
Further, although the estate planning world is slow to change, we have seen recent developments spurred by generational and technological changes such as jurisdictions that now allow for electronic wills (e.g., British Columbia, Nevada, Florida, and Arizona)—by the time Gen Beta comes of age electronic wills may be ubiquitous.
— Nicholas André