Dunham paper argues long retirements may shrink the wealth transfer

Dunham & Associates Investment Counsel, a San Diego asset manager, contends in research reported by InvestmentNews that the trillions advisors expect to pass to the next generation could be consumed before any heir sees it, because the retirement plan behind the transfer is built for a life far shorter than the client will actually live.

Baby boomers held 51.4% of U.S. household wealth in the first quarter of 2025, down from 54.7% in 2019 — a move of about three points after six years of headlines, and the figure the paper uses to size the pot.

The paper is Salvatore M. Capizzi's, an executive vice president at Dunham, and he calls the outcome a "Great Wealth Mirage." His emphasis is less on health-care costs, the usual suspect, than on the horizon: a portfolio built to fund 20 to 25 years of retirement may now have to fund 40 or 50, and even modest inflation compounded across that gap is enough to drain it.

Dunham's illustration starts with $1 million and a $40,000 first-year withdrawal, raised 2% a year to hold purchasing power. At a 4% net annual return, the assumption the paper treats as conventionally prudent, the money is gone in year 34; at 5% it lasts to year 43. Across the 50-year horizon the paper tested with 2% inflation, 6% net was the lowest return that finished without depletion.

Strip inflation out and the arithmetic turns blunt: a 4% net return against 2% inflation leaves roughly two points of real return, while the paper's own rule calls for four to five points over a 40-year retirement. The withdrawal stream keeps its purchasing power while the portfolio compounds at half the rate the rule demands, and the gap empties the account. For retirements of 40 years or longer, Capizzi proposes a Retirement Real Return Rule: returns may need to exceed inflation by about 4 to 5 percentage points, a prescription that would rewrite client plans if advisors took it up.

The work is a model, and its disclosure sits in the structure: one portfolio, one withdrawal schedule, one inflation path, run by an asset manager rather than an academic or a regulator. Its outputs are assumptions, which matters because the transfer figure the industry builds succession plans around is also a set of assumptions — these happen to be more pessimistic than the ones in circulation.

Food makes the compounding visible. A couple with $100,000 in disposable income spends 9.7% of it on food, the 2025 average the U.S. Department of Agriculture reports, while food prices rise 3.55% a year, the paper's long-run figure from Bureau of Labor Statistics data. Over 50 years that couple spends nearly $2.6 million on food, and by year 50 the annual grocery bill reaches $107,191, more than the starting income the paper assigned them. A rate most clients round to "about three and a half percent" does across five decades what a single bad decade used to do to a retirement plan.

The paper lands alongside a growing set of studies that have already scaled back expectations for the transfer, InvestmentNews reports. One Visa estimate puts about $36 trillion of boomers' $93 trillion in assets into the hands of Gen X and millennial heirs over the next 20 years, once liabilities, retirement spending, charitable bequests, taxes and fees are subtracted — roughly 39 cents on the dollar. Both exercises point the same way: what arrives at the next generation is a fraction of what the current one holds.

The distributional accounts measure a stock, taken before the spending the paper worries about has happened. Boomers' share fell 3.3 points over six years while millennials' climbed to 10.3% from 4.1% — the direction is right and the pace is slow — and nothing in that dataset can test whether the half of household wealth now resting with boomers survives to the end of their lives. That is the paper's question, and it is genuinely open.

This publication has written about what a planning window pays, the value of having the rules months before they are confirmed. The longest window an advisor manages is the client's remaining lifetime, and the Dunham paper contends the assumptions inside client portfolios have drawn it roughly two decades short.

The exposure for advisors sits in the second sentence of every succession plan: advisory businesses are valued on client assets presumed to persist, so the book passes to a successor, the heirs keep the relationship, and the fee stream continues, while the buyer pays today for assets that have to outlive the seller. Should the deposit be consumed by its owner's longevity, the second-generation handoff is smaller than the first-generation sale price assumed, and the buyer holds the difference. Platforms waiting for organic growth inherit the runoff, and the paper supplies a source for some of that runoff that has nothing to do with a competitor's recruiting call.

Dunham's test will be whether the default horizon in client projections moves toward 40 years, and whether the withdrawal rates advisors recommend still clear that distance.