Millennials and Gen Z face ‘a completely different financial landscape’ than older generations – as 42% of adults still rely on parents for money

The study also noted that one in five adults said they don’t ever expect to become financially independent of their parents, while those counting on a large inheritance tied to the Great Wealth Transfer may receive a far smaller purse than expected.

“The ‘Great Wealth Transfer’ is real, but an inheritance isn’t something most Americans can rely on,” Sippel said in the news release.

But financial therapist and author Lindsay Bryan-Podvin told Moneywise that instead of focusing on why these generations need their parents for financial support, “it’s worth exploring the external factors that have made it difficult” to become financially independent.

She pointed to a higher cost of living, including groceries and rent, as well as the fact that a college degree doesn’t ensure the financial stability that it once did, among other factors.

“Millennials and Gen Z,” she added, “are facing a completely different financial landscape than their parents and grandparents.”

Why the Great Wealth Transfer isn’t the answer

To Bryan-Podvin’s point, the larger economic picture can make financial independence seem even more out of reach.

A new report from Edward Jones, for example, showed that only 16% of Americans overall feel “financially fulfilled,” while 51% reported feeling financially “conflicted” and 32% reported being “stressed.”

“More than half of Americans are financially ‘conflicted,’ meaning they’re getting by, but don’t feel secure,” David Gunn, Principal and Head of the U.S. and Canada Business Units at Edward Jones, told Moneywise. “It comes down to three things: a lack of confidence, vulnerability to unexpected expenses and the feeling that money is controlling your life.”

That’s not surprising given that the average cost of rent in the U.S. skyrocketed by 50% in the last decade, while health and childcare rose by 40%, according to the Urban Institute. In the same timeframe, they noted, the 38% growth in median weekly earnings failed to keep pace.

Even in the last year, the Consumer Price Index rose 4.2%. Food costs were up 3% for and the energy index rose 23.5%.

And those enduring the higher cost of living while waiting for their share of $124 trillion in the Great Wealth Transfer (GWT) may need a new back-up plan.

Just 31% of Americans expect to leave an inheritance — while 57% of those waiting to receive one say it’s “critical” to their financial security, per the Northwestern Mutual study. That’s even higher for Gen Z and millennials, at 63% and 69%. The non-profit CFA Institute, however, noted that the bulk of the wealth transferred in the GWT “will be highly concentrated among a minority of the population.”

That’s because, they noted, 1% of the population hold 25% of the assets to be transferred, while 20% holds 80% of the wealth changing hands. As such, labor economist Teresa Ghilarducci warned that “after discounting the wealthiest 10% of Americans, the median inheritance of the remaining 90% is close to zero.”

Even pre-Great Wealth Transfer, the Federal Reserve found that the average inheritance totaled just $46,200, with the bottom 50% of the population only pulling in $9,700.

As people live longer, any inheritances may also be used for living and health expenses before whatever is left is eventually passed down. And with the GWT expected to last through 2048, the oldest Millennials would be 67 and the oldest Gen Zers 51 before they receive an inheritance — leaving little time to invest and build on it in a meaningful way.

How to plan for financial independence

Despite their current parental reliance, the Northwestern Mutual study found that 82% of Gen Zers who are currently financially dependent feel confident they’ll achieve independence one day. Fewer millennials and Gen Xers felt that way, at 56% and 51%, respectively (33% of Gen Xers said they were still financially dependent).

Gunn told Moneywise that “Most Americans are actually closer than they realize” to financial independence, but that getting there “does require consistency — things like budgeting, building savings and reducing debt.”