- The ‘feminization of wealth’ is coming as the boomer wealth transfer boosts women’s economic power.
- As Boomers age, their money is going to be inherited by women who are more educated and financially independent.
- “After some period of time, 10 years, 20 years, women will own the majority of wealth in this country.”
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There’s a tectonic shift taking place in the economy as the wealthiest generation ages.
Of all the ways the baby boomer wealth transfer is expected to reshape everything from housing to the stock market, it could have another big impact: making women a lot wealthier.
Boomers currently control about half of all the wealth in the US. As they age, that’s going to be transferred in a variety of ways to younger generations.
According to Ellevest, which focuses on wealth management and financial planning for women, a lot of it is going to be inherited by women in a shift the firm is calling the “feminization of wealth.”
There are two forces driving the change. For one, as women live longer than men, there’s a shuffling of wealth from boomer husbands to their wives. Second, wealth is going to trickle down to a very different generation of women.
For example, women of younger generations tend to have attained a higher level of education, they marry later in life, and are thought to be more financially literate.
That transfer is expected to narrow the gender wealth gap — which is different from the gender pay gap — though it won’t help close it completely.
In total, about $84 trillion is expected to be passed down to younger generations in the Great Wealth Transfer by 2045. But in the next decade alone, about $30 trillion of that amount is expected to go to women, a Bank of America report said. That means women in America will control more of the country’s wealth than ever before.
The generational shift is one that is expected to be amplified over time. Today, women make up a larger share of college graduates, and they are starting businesses at a faster rate than men, Ellevest’s CEO Sallie Krawcheck said in an interview with Business Insider.
“There are different ways in which the wealth is being reallocated, all of which means that after some period of time, 10 years, 20 years, women will own the majority of wealth in this country,” Krawcheck said.
That has big implications for the US economy.
As of 2021, a Council on Contemporary Families study found that mothers are the primary breadwinners in a growing number of families, and they often make many of the household’s consumer spending decisions.
“The consumer drives the majority of economic growth today,” she said. “Women consumers drive the significant majority of that.”
As women’s economic power evolves, the economy increasingly caters to their needs.
The pandemic is a good example of the shifting dynamic, Tracy Bell, director of equity investment strategies from First Horizon Advisors, said. Unlike the 2008 crash which impacted men more, the COVID-19 era was particularly tough for women.
One of the things that kept women out of the labor force was affordable and dependable childcare. As women control more wealth, those corners of the economy will adapt to their needs.
“Having affordable and accessible child and elder care are two areas where you may see additional work from a policy standpoint — women lobbying more for that, saying that that’s a bigger deal and that’s becoming a more important issue,” Bell said.
She added: “When women have more money within their control, they have more power. It’s just the way the world works.”
Bell said that women often think about finances and spending differently.
A Bank of America Private Bank study of wealthy Americans found that women are more likely to believe sustainable investing can have a positive impact on society, and the focus on impact could drive more money to causes that women support.
“Invest for positive impact” ranked among the top five priorities for all generations of women except for Gen Z when it comes to deciding what to do with a lump sum amount of money, Ellevest’s survey found.
“I think the short answer is everything can change,” Ellevest’s CEO said. “That’s why we call it the feminization of wealth.”
