What Generational Macroeconomics Reveals About Wealth in America

The life cycle hypothesis says we save then spend down in retirement—but real families behave differently. Discover how precautionary savings and bequests shape America’s wealth landscape.

Nov 12, 2025

Macroeconomics isn’t just about interest rates and GDP—it’s about people, families, and the choices they make over their lifetimes. Economists describe this through the life-cycle hypothesis: we work, accumulate wealth, and then spend down in retirement.
But reality looks different.

Detailed studies show that middle-income couples in the United States continue to build wealth well into their 80s, while high-income singles keep saving long after retiring. Why? Because of uncertainty—about health costs, about the future—and the desire to leave something behind.

The Power of Bequests

Research from the Federal Reserve Bank of Minneapolis reveals that many households build “precautionary buffers” to cover late-life medical expenses and leave bequests to children or grandchildren. For some high-income couples, this motivation leads them to accumulate over 30% more wealth than they otherwise would.
Intergenerational transfers—inheritances and major gifts—are among the most powerful forces in our economy.
But they’re also among the most unevenly distributed.

The Uneven Flow of Wealth

According to the Federal Reserve’s Survey of Consumer Finances, the top 10% of households receive the vast majority of inheritances and gifts. That means the very mechanism meant to sustain families—saving and passing down wealth—often reinforces existing disparities.

As of 2022, the average White family held six times the wealth of the average Black family, and five times that of the average Hispanic family. The St. Louis Fed attributes much of this divide to policies that historically stripped wealth from Black households while facilitating accumulation among White families.

The Generational Divide

Generational macroeconomics teaches us that economic fate is shaped by three forces:

The era you’re born into
The shocks your generation experiences—recessions, pandemics, or inflationary cycles
The wealth (or debt) you inherit

Younger generations today face record student debt, housing shortages, and stagnant wages—barriers their parents rarely encountered at this scale. Meanwhile, those at the top continue to multiply wealth through capital markets and inheritance, widening the gap with each passing decade.

Where We Go From Here

Wealth building isn’t just a matter of personal discipline—it’s deeply embedded in the macroeconomic structures we live within.

Here’s what can help:

Expand access to education, affordable housing, and healthcare. This reduces the need for excessive precautionary savings.
Democratize intergenerational wealth, through tools like baby bonds, community investment trusts, and employee ownership programs.
Redefine legacy. Leave a bequest that promotes equity—not just inheritance.

Call to Action

Reflect on your own generational context.

What advantages—or disadvantages—have shaped your financial journey?

Share your story with us at The Wealth Salons. Together, we can design tools and policies that make the macroeconomy work for every generation.

Join the conversation. Share this post with someone who needs to hear it, and connect with The Wealth Salons to learn how you can help build wealth in The Great 38. Let’s co-create a future where every community has the tools to thrive.

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