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Building a financial legacy

4 tips to build and protect generational wealth

Providing for your family is important, it creates stability and provides opportunity for your children and possibly grandchildren. It makes you feel good to see them benefit from the fruits of your labor. And you want that to last — even after you’re gone. During the next two decades, it’s projected that older generations will pass down $80 trillion to their children and heirs.1

That’s called generational wealth.

What is generational wealth?

Generational wealth can take many different forms including cash, investment funds, stocks and bonds, real estate property, and businesses — all great assets to pass on to the next generation.

Perhaps the easiest way to start building generational wealth is through homeownership. According to the Federal Reserve, homeowners have a median net worth of $255,000, while renters have just $6,300.2

However, wealth has an endpoint if it’s not properly cared for — and sooner than you may think. Surprisingly, the majority (70%) of wealthy families lose their wealth by the next generation.1

That’s why it’s so important to also pass down intangible wealth, such as financial education and literacy, values, and spending habits.3 That might mean your family creates a habit of packing their lunch (instead of eating out) or regularly having healthy conversations around the dinner table about money.2

Here are some tips to get you started on the road to generational wealth.

4 ways to build and protect generational wealth…

1. Financial education

Understanding your finances is key to growing generational wealth. Unfortunately, for most adults, a financial education starts sometime after high school graduation. Only 22% of American high school students take a financial literacy class at their schools. However, the majority of students (76%) would have liked for their schools to have placed more importance on personal finance courses. A school might offer a financial course as an elective, but many students’ schedules are already packed with other required classes and activities.4

Thankfully, it’s never too late to learn about financial matters. Podcasts, community education courses, books, and blogs are all good resources for the late bloomer. And ratcheting up an understanding of how to build and maintain wealth will help you now and well into the future.

A little over 60% of consumers have a good grasp of borrowing-related concepts but have trouble understanding risk and uncertainty.1 So maybe make that your focus of learning.

If you’re a parent with young children, it’s never too early to start their financial education. That’s because many of our financial habits are formed by the time we are age 7, as a result of our feelings being formed by how people around us talked about money.5

The next time you plan a vacation, allow your children to help create a budget. This will introduce them to the costs and trade-offs of putting together a fun — yet balanced — vacation itinerary.6

2. Budgeting

Speaking of budgeting, creating one for your family — and sticking to it — can make a big impact. That means that even if your income increases and you are seemingly in good financial shape, you more likely to avoid “lifestyle creep,” the temptation to spend more on your lifestyle just because you can.

Gen Xers (those born between 1965 and 1980) have an average net worth between $436,200 and $1.1 million However, only 22% of Gen X workers are “very” confident that they will have a comfortable lifestyle in their retirement years, thanks to rising inflation and the cost of living. This generation is also the one to carry the most amount of debt.7

A couple ways to pay off debt include the snowball and avalanche methods. With the former, you pay off the smallest debts first. With the latter, you pay off the higher interest rate debts first.8

A good and easy budget is the 50/30/20 budget that allocates your monthly income into mandatory expenses (50%), savings and debt repayment (20%), and discretionary spending (30%).8

It doesn’t matter how big — or how small — your bank account is. Your money can grow over time. In fact, 1 in 5 families who earn $35,000 or less annually have stock market assets.1 And Americans who lived through the Great Depression often made sure to live within their means and taught the younger generation that managing money correctly is more important than how much a person is paid, when building wealth.6

Investing a few bucks a month in the stock market is a relatively easy way to grow money over time.3 And be sure you are making the most of contributing to your 401(k) plan.

3. Life Insurance

Life insurance is more than a large sum of money that’s delivered to a loved one after your death. It can be a good tool to help build generational wealth.

First, if you provide for a spouse or children, the death benefit from life insurance enables you to keep providing for them, helping them to keep their current lifestyle as they build for their future.

Life insurance can help do so much more. Here are a few examples:  pay estate taxes from inherited assets; finance a college education; pay off debt. All of these things can help build wealth and have a trickle-down effect for future generations.9

4. Estate planning

Surprisingly, just 33% of Americans have a living will or trust. The reason for many of the 66% who don’t have a plan in place to distribute their money and possessions? It’s because they think they don’t have enough assets for it to make sense.1

But any assets you do have will help the next generation create a financial foundation to build upon. So, get a team in place — one that includes an estate planning attorney, tax adviser, and financial professional — to help you put a plan in place for distributing and investing your wealth, and creating a long-term legacy.1

Be sure your estate plan passes the multigenerational test, which encompasses adding any new family members, such as children, grandchildren, and great-grandchildren. Parents often focus on saving for college while grandparents gear toward gifting money.10

The incremental approach

Remember that you don’t need lottery-sized earnings to build generational wealth. Instead, let your wealth build up over time. That’s what legendary investor Warren Buffett did. He saw investing as a long game, much like a marathon versus a 100-meter dash.

Consider investing your funds over a period of time, an investment strategy referred to as dollar-cost averaging. This strategy has you investing your money in equal portions at regular intervals regardless of the market fluctuations. Dollar-cost averaging may help reduce some of the short-term risk and emotions of investing, while providing an opportunity for building a financial legacy.12

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1. Pino, Ivana. Generational wealth explained: What it is and how experts say you can work to build and protect it,” December 14, 2022,

2. Matteo, Megan. How this entrepreneur is working to help Black women build generational wealth through homeownership,” January 26, 2022,

3. Gilmore, Crystal. Closing The Generational Wealth Gap: Five Ways To Build Wealth,” February 18, 2022,

4. Agarwal, Aditi; Grover, Monica. Money Talks: How Financial Literacy Education Can Transform The Lives Of Second-Generation Immigrants,” April 14, 2023,

5. Wealth, Anne-Lyse. How to Build Wealth When You Don’t Come from Money,” March 17, 2022,

6. Alfonseca, Kiara. What is generational wealth and how do you build it?” July 13, 2022,

7. Pino, Ivana. Gen X’s average net worth and the obstacles they face in building wealth,” November 12, 2022,

8. Tarver, Jordan. Financial planning basics,” June 30, 2022,

9. Oelker, Katie. Top 8 ways life insurance can build generational wealth,” January 6, 2023,

10. Gondeck, JR; Martinez; Vanessa. Your Legacy: How To Create A Multigenerational Estate Plan,” August 25, 2021,

11. Venkatesh, S. Why you should get rich slowly,” May 5, 2022,

12. The Pros and Cons of Dollar-Cost Averaging,” May 24, 2022, FINRA

This is a general communication for informational and educational purposes. The information is not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. If you are seeking investment advice or recommendations, please contact your financial professional.

Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.

Life insurance products contain charges, such as Cost of Insurance Charge, Cash Extra Charge, and Additional Agreements Charge (which we refer to as mortality charges), and Premium Charge, Monthly Policy Charge, Policy Issue Charge, Transaction Charge, Index Segment Charge, and Surrender Charge (which we refer to as expense charges). These charges may increase over time, and these policies may contain restrictions, such as surrender periods. Policyholders could lose money in these products.

Policy loans and withdrawals may create an adverse tax result in the event of lapse or policy surrender and will reduce both the surrender value and death benefit. Withdrawals may be subject to taxation within the first fifteen years of the contract. You should consult your tax advisor when considering taking a policy loan or withdrawal.

​Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

DOFU 5-2023