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Transfer of Wealth: Frequently Asked Questions
Who conducted the Transfer of Wealth Research?
The research was released by the Rural Policy Research Institute (RUPRI) Center for Rural Entrepreneurship and was funded in part by the W. K. Kellogg Foundation. It is based on information provided by The Federal Reserve System, U.S. Census Bureau, and state and local demographers. Analysis is adjusted for inflation, so a dollar in 2055 is worth the same as in 2005.
What is the Transfer of Wealth?
Social science researchers tell us that in the next 50 years, the largest mass of wealth in history will transfer from the World War II generation to Baby Boomers, then from Baby Boomers to the next generation. This transfer is estimated at $53 trillion nationwide.
What is the Transfer of Wealth estimate for Kalamazoo County?
During the coming decade, $3.78 billion is expected to transfer fro one generation to the next. Over the next 50 years, the estimated transfer of wealth for Kalamazoo County is $23.38 billion.
What does this mean for our community?
This is significant as Kalamazoo County can secure a portion of this wealth for its future sustainability. In the next 10 years, if just five percent of this transfer could be invested at the Community Foundation in an endowed fund, nearly $189.06 million would be gained. Figuring a five percent grant payout, an estimated $9.45 million could be available annually to improve the quality of life in our community and help to secure our future.
Why the five percent transfer of wealth capture goal?
The five percent goal is being used across America. It is conservative and very achievable. It is a place to start building the future of our community.
How do we know these figures are correct?
It is important to note that the estimation of Transfer of Wealth is considered a possible future scenario for communities to consider; it is not a prediction or an absolute number about the future. We acknowledge that things could change in the next decade or 50 years, but these figures show the potential opportunity.
Why are community foundations involved in this effort?
Community foundations across the country have taken a leadership role in quantifying the transfer for our communities. We have a long history of meeting the current and long term needs of communities with proven, effective results. The community foundation hopes to ensure that a portion of the transfer of wealth is preserved and invested in our community. We have an opportunity to help secure our future and strengthen and sustain our community for this and future generations.
Why do we need to address this now?
The experts tell us that the transfer will cross state lines like never before. For generations, most people lived entire lives close to their birthplace. Today, that's no longer true. Many of the “next generations” no longer live in Kalamazoo County, and typically once the wealth leaves, it never returns.
What can residents of the community do to help secure this Transfer of Wealth?
1. Set aside a portion of their estate for the good of this community forever-this could be to benefit a local
nonprofit or leaving a legacy by establishing a charitable fund at the Kalamazoo Community
Foundation ($5,000 minimum for an unrestricted fund).
2. Give retirement assets through their estate. Because of income and possible estate taxes,
retirement assets may lose up to 70 percent of their value when given to heirs.
3. Designated the Community Foundation as an insurance policy or retirement account beneficiary.
This can be done without revising the estate plan.
Who may we contact for more details about how the research was conducted?
The Council of Michigan Foundations at (616) 842-7080.
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