How can Christmas be right around the corner? Didn’t we just put away the pumpkin carving tools? Wasn’t it two weeks ago that we made room in the garage for the deck chairs?

While we prepare for the traditional season of giving, the lack of preparation by baby boomer heirs for “the great transition of wealth” from their parents and grandparents rarely is discussed–at any time of the year. Whether it’s a small business, a few stocks and bonds, the family cabin or equity in commercial real estate, children often don’t know the best way to handle assets that could be coming from mom and dad.

The Williams Group, a financial planning firm based in Stockton, Calif., researched 3,250 families that transitioned their wealth to their heirs. The firm’s data showed that only 30 percent of families transition their wealth successfully, mainly because they failed to properly prepare their heirs.

The transition of wealth hasn’t really been a problem for previous generations, but the happy-to-borrow boomers pose an entirely different challenge. The GI Generation, also known as the “Greatest Generation,” had to “make do” during the Depression and World War II and that philosophy still influences its conduct today. Members of this group often are reluctant to spend money on themselves in order to make their lives more comfortable. They definitely subscribe to a pay-it-off philosophy, especially when it comes to the roof over their heads. Very few purchased–or even cared to explore–long-term care insurance and are thus footing the bill for homecare assistance.

The GI’s unwritten goal was to retire without a mortgage and not achieving this goal was often seen, and felt, as a huge and depressing failure. Many of them don’t see any reason to dive into their financial assets and “would rather leave it for the kids,” even though the kids could be in a far better financial place than the folks.

Baby boomers–the largest, healthiest and wealthiest group ever appearing on the U.S. growth landscape–never met a loan they didn’t like. After leveraging appreciation and location in their starter and move-up homes to pay for cars, college tuitions and trips, their eventual retirement home probably will hold most of the equity in their lives. Their last home will not be terribly modest because of their desire to entertain. Some members will purchase long-term care insurance in their earning years, allowing for more cash to be spent on more gadgets.

While some analysts say the boomers will gain wisdom with age and curb their spending ways down the road, others won’t be persuaded. How they will behave continues to confound researchers–but what else is new?

In an economic study prepared by The Urban Institute for AARP, authors Barbara Butrica and Cori Uccello contend that boomers will amass more wealth in real terms at retirement than will the two previous generations. Median household wealth at age 67 will grow from $448,000 among current retirees to $600,000 among boomers. Income at retirement is consistent with trends in wealth at retirement, the study shows. Projected household income at age 67 will increase from $44,000 among current retirees to $65,000 among boomers. As with wealth, there will be income disparities among older and younger boomers. Non-retirement income is expected to decline between older and younger boomers.

However, other researchers, including Larry Cohen, director of Consumer Financial Decisions based in Princeton, N.J., wonder if boomers, given their spending history, will ever get to the traditional retirement years with any real assets.

“As the cohort responsible for the explosion of credit in the 1980s and 1990s, boomers are hardly likely to forego immediate gratification in their later years,” Cohen said. “The trend among seniors will only be exacerbated when the boomers enter retirement age. The convenience of credit card use with the occasional slip into revolving credit along with leveraging their assets for around-the-world tours or trips into space mean that the more responsible boomers will have credit insurance to cover their inevitable demise. The rest, who are not so wealthy that they simply can afford that type of lifestyle, may wind up bequeathing their debt as their legacy instead of the ‘trillions’ that they inherited.”

Spend and borrow, spend and borrow…Boomers, who will work into their 70s, will continue to do both. Why expect them to change when they’ve changed the world around them every step of the way?

Tom Kelly’s new book, “Cashing In on a Second Home in Mexico: How to Buy, Sell and Profit from Property South of the Border,” was co-written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on www.Amazon.com or get your signed copy at www.tomkelly.com.

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