Baby Boomers are driving the largest, and most significant intergenerational wealth transfer in Australian history, and the nation is at a crossroads. Trillions of dollars will pass onto future generations over the next 20 years as Boomers exit the workforce, retire, and pass away.

This unprecedented wealth transfer will have profound consequences for the country prosperity - an opportunity that will either be made or lost.

The Great Intergenerational Wealth Transfer

Up to 70% of Boomers combined $3.5 trillion net worth, or $326,000 per household, is set to transfer to Gen X children and Millennial grandchildren.

This figure, growing at 7% per annum, is 75% greater than national GDP, highlighting the scale of the dilemma ahead.

A number of factors are changing the landscape for intergenerational wealth transfer and the retirement prospects of future generations. This includes:

• Australia aging population - median age 37 vs 30 just three decades ago.

• More retirees, and an increase in retirement years needing funding, due to increased life expectancies.

• Older Australians are living through younger life stages due to psychographic changes.

• Retirement expenses outpacing growth in the Age Pension.

Grand Retirements, or Granny Flats for Future Retirees?

With such an enormous transition ahead, the nation faces two distinctive paths, yet retirees have been encouraged to spend big instead of leaving an inheritance for future generations.

One outcome sees the possibility of the greatest retirement ever known, where future retirees can live longer and prosper in a social, financial, and lifestyle sense.

The other path could see Granny Flats reemerging in great volume, where future retirees exhaust their retirement savings and turn to frugal means of living.

This contrast underscores the significant opportunity cost if Boomers don't transfer their wealth to their children to invest for their future retirement needs.

Gen X and Millennials are expected to face even greater challenges in retirement due to a greater predisposition to be in debt earlier in life, an undersupply of retirement housing, rising living expenses, increased life expectancies, and diminished capacity for the government to fund longer retirements. Intergenerational wealth transfer is central to their futures, and those of generations to follow.

But individuals from these groups also have a choice. They must decide between investing their inheritance as part of a wealth recycling movement that could fund their retirement effectively and add trillions to the economy, or spending it in entirety.

How Can Advisers Support the Wealth Transfer Opportunity?

Boomers are not only the wealthiest generation, but they are also the most advised generation. With the intergenerational wealth transfer extending to Gen X and Millennials, advisers should make a proactive effort to build relationships with these generations.

Advisers should aim to become a trusted and authoritative source for all financial matters, including superannuation and SMSF set-up, estate planning, retirement planning, and more.

The simplest way to bridge this advice vacuum' between generations is by including kids and grandchildren in key discussions and meetings, and by taking early steps to support intergenerational wealth transfer.

Fostering relationships with this younger demographic now must be a priority if you, the adviser, are to be the first person they go to when inheriting wealth. Some practical options to develop a relationship now with them might include opening a trading account (or a Minor account if under 18), setting up cash flow strategies and budgeting or involving them in conversations about beneficiary nominations.

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