“Millennials will be very wealthy when they retire. » This is the conclusion of Afi researcher, Daniel Manzano, and his team, who published the report “Demographic, real estate and wealth gaps” this Wednesday. Manzano himself admits that, without further context and in the midst of the housing access crisis, this is a “provocative” statement. But these economists have made a projection of the transmission of wealth (mainly through the inheritance of apartments and houses) that “baby boomer” parents will make to their “millennial” children which demonstrates this.
Of course, the same Afi study warns that the “great succession” that will occur in the coming decades will concentrate wealth even more than it already does in the highest incomes. In other words, inequalities will increase.
The data from the study (which draws on main statistics from the Bank of Spain and the INE) says the following. First of all, it must be taken into account that they present two scenarios, as shown in the first graph of this information. A country in which wealth (nearly 80% is made up of housing in Spain) is not revalued. Another in which it does so at a rate of 20% every two decades. “If we base ourselves on the first hypothesis, the demographic factor is clearly favorable to the next two generations [entre 45 y 65 años, según el ejercicio]whose relative size is much smaller compared to the “baby boomer” generation [más de 65 años] This will allow them to benefit from a higher average transmission per person,” calculate the Afi experts.
“Concretely, and in this hypothesis of no future revaluation, generation Y would aspire to an average transmission of 250,000 euros per person between 2042 and 2062, or 41% more than that of the baby boomer generation. This increase is fundamentally due to the spectacular reduction in the number of donees compared to donors, from 1.51 in 2022 to 1.07 in 2042. The demographic equalization of the cohorts in 2062 stabilizes the growth of this hypothetical average inheritance around 9 % (272,000 euros). ) for the next generation,” the study explains.
Keeping in mind that these are aggregate figures, which do not show inequalities, the “great succession” will make people even richer if we work with the second hypothesis of revaluation of wealth.
Growing inequalities
However, beyond aggregate calculations, there is a starting point according to which wealth is concentrated in the highest strata of society. According to the latest Household Financial Survey (EFF) of the Bank of Spain, the real gap remains the same as always: the one that widened after the bursting of the real estate bubble and with austerity policies. The richest 10% of families hold just over half of the total wealth in Spain. A proportion which only decreased slightly during the 2022 wave (the last one carried out), compared to the previous one in 2020.
In fact, our nation’s top 1% of families held 19.4% of total wealth in 2022, just 2.5 points below the 2020 high, when they held 22.9%.
From this initial gap, Afi’s study shows that the “large succession” or inheritances will be much “quantitatively more important in the high wealth brackets, which could amplify the inequality in the distribution of intragenerational wealth”. [dentro de la misma generación]”.
Afi economists use evidence. In 2008, between 35% and 63% of households over the age of 65 belonging to the richest quintile in our country had received an inheritance. In 2022, this range will rise to between 70% and 77%. “A trend that will continue to progress,” they believe.
“Another factor which could influence the future distribution of wealth, and undoubtedly in the direction of greater inequality, is the growing weight of the foreign population (in particular those originating from countries with incomes lower than ours, which is the majority ) in virtually all age groups. “, continues the report.
“The growing presence of the foreign population will distort the distribution of wealth towards greater inequality in two ways: on the one hand, because their relative position in the distribution of income and wealth is generally at the bottom of the scale and , on the other hand, because on the other hand, due to the small percentage of them who receive large inheritances or intergenerational transfers,” concludes Afi.
