The trillions of dollars that financial advisors expect baby boomers to pass to their heirs may shrink long before it changes hands, according to new research from a San Diego asset manager that blames retirement plans built for much shorter lives.
The paper authored by Salvatore M. Capizzi, executive vice president of Dunham & Associates Investment Counsel argues that the Great Wealth Transfer could become what he calls a "Great Wealth Mirage."
Rather than resting his point mainly on health care costs, Capizzi maintained that portfolios designed to last 20 to 25 years may now have to last 40 or 50, and even modest inflation, compounded over that stretch, can drain them.
"The Great Wealth Transfer assumes assets will still be there to transfer," Capizzi said. "But if people live longer, spend longer, and invest under assumptions built for a much shorter retirement, the inheritance may be quietly consumed before it ever reaches the next generation."
Sizing up the amount of money at stake, the paper pointed to Federal Reserve Distributional Financial Accounts data showing that baby boomers held 51.4% of U.S. household wealth in the first quarter of 2025, down only modestly from 54.7% in 2019. Over the same period, millennials' share rose to 10.3% from 4.1%.
The research adds to a growing set of studies that have already scaled back expectations for the transfer. After subtracting liabilities and accounting for retirement spending, charitable bequests, taxes and fees, one estimate by Visa projects approximately $36 trillion of baby boomers' $93 trillion in assets will pass to Gen X and millennial heirs over the next 20 years.
Dunham modeled a hypothetical $1 million portfolio with $40,000 in first-year withdrawals that rise 2% a year to keep pace with inflation. At a 4% net annual return, a figure many advisors would consider prudent, the account runs out in year 34. At 5% net, it runs out in year 43. Of the returns the paper tested over a 50-year horizon with 2% inflation, 6% net was the lowest that avoided depletion.
The paper also uses food spending to show how small price increases add up. It assumes a couple with $100,000 in disposable income spends 9.7% of it on food, the 2025 average reported by the U.S. Department of Agriculture, and that food prices rise 3.55% a year, the paper's long-run figure based on Bureau of Labor Statistics data. Under those assumptions, the couple would spend nearly $2.6 million on food over 50 years. By year 50, the couple's annual food bill would be $107,191, which is more than their starting income.
From these scenarios, Capizzi proposes what he calls the Retirement Real Return Rule. For retirements of 40 years or longer, the rule holds that portfolio returns may need to exceed inflation by about 4 to 5 percentage points. At the Federal Reserve's 2% inflation target, that implies net returns of 6% to 7%.
New survey data shows many older Americans already feel the cost pressures behind Dunham's models. According to the initial findings from Longbridge Financial's 2026 Home Equity Confidence Index, 67% of homeowners 55 and older consider inflation and the rising cost of living as a leading financial concern. That's comfortably ahead of health care costs (cited by 43%), property taxes and home maintenance (38%), and homeowners insurance (26%).
When asked about their personal finances, just 28% said they expect to be better off next year, while 44% expect no changes and 23% think they'll be worse off.
Confidence varied sharply by income. Among households earning $100,000 or more, 76% said they feel confident about their long-term financial security. Among households earning less than $50,000, the figure was 39%. Women were more likely than men to cite home maintenance as a major concern, at 45% compared with 31%.
In Dunham's analysis, Capizzi described a scenario of multi-generation retirement, where adult children and grandchildren end up having to support longer-living relatives who have run out of money. In that case, the inheritance disappears, and the heirs must also fund their own retirements while supporting older relatives.
The paper also argues that the standard view of sequence risk is incomplete. In one example, two retirees each average a 5% return over 48 years and make identical withdrawals. The retiree who earns lower returns early runs out of money in year 27. The retiree who earns higher returns early still holds more than $1.9 million at the end.
A second example tests the timing of inflation. Two retirees each earn 6% net, and inflation averages 2.5% for both over 40 years. The retiree whose inflation rises over time stays solvent. The retiree who faces the highest inflation first runs out of money by year 37.
"This is not an argument for ignoring market risk or simply taking more risk," Capizzi said. "It is an argument for being honest about longevity risk. A plan that looks conservative over 20 years may be dangerously underpowered over 50."
“I’m seeing more disputes like this between advisors and other advisors at the same practice,” said one industry executive.
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