Most people have probably heard about the expected transfer of wealth. As the baby boomer generation continues to age and accumulate wealth, many people are ready to see how this will affect millennials and other receiving generations. Generational wealth has definitely been trending in the digital world, with people anxiously searching for ways to increase their income, savings, and investments to build generational wealth.

But in an economic climate where most Americans can’t cover a $1,000 emergency, increasing their net worth and generational wealth may be the least of their worries. The “stop the bleeding” approach for these situations would seem simple–get more money. With the transfer of wealth, many millennials may inherit assets that can give them the margin they need for saving and investing.

This transfer of wealth can substantially impact lives on an individual basis. But it will also affect our global economy. Here are five alarming ways this monumental transfer could reshape the economy and highlight opportunities and challenges that lie ahead.

Widening the Wealth Gap

In some cases, the wealth inequalities between rich and poor populations are inevitable. The rich get richer, and the poor get poorer because of extreme differences in money habits. Financial literacy is a huge determining factor when considering wealth equality. Simply giving more money to poorer populations will not narrow the wealth gap.

But with millennials carrying the most debt compared to other generations, will an inheritance from their boomer parents and grandparents be helpful? In some cases–yes. In others, it may actually make things worse. For example, millennials are burdened with student loans and credit card debt and may need to liquidate assets immediately. Inherited assets like real estate or IRAs are not as valuable when you don’t know how to sell a house in probate or which strategies to use to reduce your tax burden.

Desperate times call for desperate measures, leading to bad money decisions and possibly falling deeper into debt. But heirs who are more financially savvy are usually the ones whose parents passed down good money habits along with those physical assets, which is why the wealth stays with the wealthy in many cases.

Shift Consumer Spending

Some generations may have different spending habits based on where they are in life. Baby boomers do not spend money the same way that millennials do. They have different priorities and financial situations that influence their decision-making. How does this shift consumer spending for the rest of the population?

Boomers may focus their time and money on home renovations, healthcare, and retirement while millennials spend more on technology, education, and experiences. As wealth is transferred to millennials and Generation Z, experience-based consumption will probably skyrocket. Businesses that provide these services will thrive in this economic climate, creating more opportunities for entrepreneurs.

Disrupt a Fragile Housing Market

Affordable housing is another trending topic and a sore spot for many Americans. Interest rates and average home prices continue to rise while people, mostly boomers, are less likely to sell their homes in this market. But as millennials inherit assets, they have more opportunities to enter the housing market, which will drive up prices in an already extremely competitive housing market.

When housing prices go up, the demand for rent increases which also increases rents. On the other hand, health and financial challenges may cause baby boomers to sell their homes and downsize or move in with their adult children. This could alter social dynamics within households across the country as wealth passes to the next reigning generation.

Transform Investment Behavior

Younger generations tend to take more risks when investing because they have more time to save for retirement and more exposure to sexier investment opportunities like cryptocurrency and venture capital. As wealth changes hands, we’re more likely to see a rise in these trendier investment options. What does this mean for new finance companies?

Traditional investment managers and financial advisors will need to change their strategies to meet the expectations of younger investors. These generations also want their investments to match their core values and beliefs, leaving more opportunities for sustainable and socially responsible investing.

New Ways to Manage Generational Wealth

Younger generations are better at using technology to manage finances more effectively. Millennials use mobile applications and budgeting software more than boomers, creating more opportunities for these digital products as wealth is transferred. They also have more options to continue to add to their wealth using multiple income streams.

Focusing on financial education, the gig economy, and freelance work provides a good foundation for building more wealth and using it wisely. The wealth transfer can also create an even greater need for financial literacy as adult children assist aging parents with healthcare expenses, long-term care costs, and end-of-life planning.

Final Thoughts

Inheriting wealth is a good thing and something that most parents would want to be able to do for their children. Some heirs will be more prepared than others and the way they manage the wealth will influence consumer spending. The passing down of wealth from generation to generation is leading to a shift in the economic climate with a big impact on individuals, businesses, and society as a whole.

The transfer of wealth from baby boomers to younger generations has the potential to reshape the economy by potentially widening the wealth gap, shifting consumer spending, disrupting the housing market, transforming investment behavior, and creating new ways of managing multigenerational wealth. Proper preparation can help individuals and businesses navigate the complexities of wealth transfer and shape an economy that works for everyone.