T
he notion that Baby Boomers will seamlessly transfer tens of trillions of dollars to Gen-X and Millennial generations as they exit the workforce is flawed. The assets being transferred – real estate and stocks – are overvalued due to a surplus of wealthy buyers willing to pay inflated prices. However, these buyers are scarce among younger generations.

    The ownership of real estate and stocks is concentrated in the hands of the wealthiest 10%, who tend to be older. This means that there aren't enough Gen-Xers and Millennials with the means to buy million-dollar homes and overpriced portfolios. When Boomers start selling their assets, prices will plummet if sellers outnumber qualified buyers.

    Younger generations hoping to inherit wealth overlook that many aging Boomers plan to sell their stocks and homes to fund retirement. These sales will put downward pressure on asset prices, making it even harder for younger people to afford the inherited wealth. Inheriting a house often requires selling it to split the money among heirs, which relies on buyers emerging to purchase overvalued properties.

    Prices are set on the margin, meaning that if many homes sell at lower prices, the values of other homes in the same neighborhood will also decline. With few retirement and nursing homes being built, many Boomers will stay in their own homes as they age, consuming their inheritance or extending the transfer of assets to the point where heirs are in their 70s.

    The concentration of wealth among the top 10% means there aren't enough young people with sufficient wealth and income to buy Boomer assets at today's bubble prices. Absent demand from tens of millions of wealthy buyers, asset valuations will fall as Boomers sell assets to fund retirement. In many cases, the wealth younger people hope to inherit will be consumed by costly nursing home fees.

    The expectation that asset valuations will remain high is based on flawed reasoning and demographic realities. The top tier of older, wealthier individuals owns 50% of all wealth, leaving little room for those with lesser means to afford buying assets at today's prices. As Boomers sell their assets, valuations will fall, reaping the benefits only for the first sellers.