Generational Wealth

In our society, hot topics come and go; each generating a lot of press, hype, concern and historical secrets finally revealed. Generational wealth is the latest in a long string of painful reminders of our past which has recently surfaced into our consciousness.

The market crash of 2008, George Floyd incident and other reveals brought a new level of understanding of wealth building, societal success and life style enhancements available to some and yet leaving many others behind. We were told that generational wealth was the culprit. If only it were that easy to explain away. Now to be sure, generational wealth transfer is a real thing. Sharing liberally from the internet, I found some interesting facts about the subject:

“In the United States, a survey from the Federal Reserve shows that the top 10% of the population holds 74% of the country’s wealth, while the bottom 50% holds just 2%. A major reason for that disparity is the transfer of wealth from generation to generation.”

“A 2018 analysis by the Federal Reserve reported that “the bulk of intergenerational transfers are flowing to families that already have substantial resources.” It found that nearly 40% of intergenerational transfers went to households in the top 10% of the population in terms of income, while only about 20% went to families in the bottom 50%.”

Other types of intergenerational wealth transfers may come into play here. For example, education is highly correlated with greater earning power and wealth. Thus, a family that can afford to pay for the next generation’s college education is giving them an edge in accumulating more wealth of their own.

“The 2022 Survey of Consumer Finances by the Federal Reserve documents racial disparities in financial well-being in the country. According to the report, the average White family had approximately six times as much wealth as the average Black family and five times the average Hispanic family.”

The report goes on to specifically state that "because of continued barriers and the inter-generational nature of wealth, it is very difficult for individuals or families to overcome the gaps."

While facts can’t be disputed (except in today’s political climate) I think there are mitigating circumstances in this discussion that are often overlooked. Hence, it’s never as simple as it’s been painted.

One of my family members and I have a different perspective on generational wealth. Our conversations sometimes make me think I should apologize for being born white. Not privileged, not well educated, nor wise to societal norms and nuances, just plain white. And she has a point there.

My mother (as many of my past blogs have mentioned) was born and raised on a farm in Sterns County, Minnesota. She had a sixth-grade education, no marketable skills, no family support system and no encouragement to leave the nest.

Yet she somehow found the wherewithal, determination, guts and perseverance to succeed on her own. As a young woman she traveled the country, visited the World’s Fair in Chicago and settled in Carmel, California. That is until her father’s declining health brought her back to the farm she so desperately wanted to escape from. Then a chance meeting at the Twin Cities Arsenal (tough work but good pay) brought my future father into the picture.

After that marriage failed and with two toddlers to support, she somehow found the focus and determination to build her own home and enroll my sister and I in a Catholic grade school in downtown Saint Paul. Her focus was on the Catholic part, not necessarily the educational angle.

Now, I will be the first to recognize that while her situation was dire at times and incredibly difficult, it would have been exponentially harder had she not been born white. Simple as that.

Where I sometimes come to mental fisticuffs with my relative on this subject is the self-determination angle. I know I sometimes sound like an old conservative codger but I do believe in mental fortitude, self-determination and nurturing a hunger to succeed. That desire to get ahead is color blind, deaf to negativity and strong enough to overcome whatever is placed in front of it.

While I can’t now nor could I back then clearly explain why I had a different vision for my life; I know I did. Being raised as good German Catholics, my mother, sister and I never talked about anything or anyone in a negative manner. Yet, even by eighth grade, I knew which family members drank too much, couldn’t keep a job, had low-end jobs and not much of a future. I also knew which extended family members had carved out a different vision for themselves.

One Sunday morning, during a very long and painful sermon about ‘who the hell knows what?’ I decided to mentally divorce my relatives. I knew I meant nothing to them; they meant nothing to me; we were related in name only.

Getting accepted into Cretin High School put me directly on a path I knew I was going to follow. I’m pretty sure among some of the relatives that was known as ‘risen above one’s raisin’ and always began with ‘So, who does he think he is?’

My point is simply this: I know it would have been more difficult for me to succeed had I not been born white. But the color of my skin would not nor could not have erased the hunger I felt inside to succeed. That was true for me and can be true for anyone today. While color can be a determining factor in so many angles of life, there are still many avenues to success for generational wealth.

Helping your children with educational expenses, medical expenses, and a solid, mentally healthy upbringing are all steps toward financial freedom for them. Of course, the best gift any parent can give their kids are learning useful life skills followed by a good educational foundation and/or good trade or job skills.

Yes, generational wealth is harder to attain nowadays but still possible for many. It just takes a lot of work – hard work to succeed.

Welcome to the real world.