Dunham paper says 40-year retirements could shrink the wealth transfer

With baby boomers holding 51.4 percent of U.S. household wealth in the first quarter of 2025, down only modestly from 54.7 percent in 2019, the trillions they are expected to leave their heirs have become a fixture of every advisor's growth plan. A new paper from San Diego asset manager Dunham & Associates Investment Counsel argues the transfer may shrink before it happens, and places the cause less in health-care costs than in a retirement plan built for a much shorter life than the one it now has to fund.

Dunham executive vice president Salvatore M. Capizzi authored the research, which gives the idea a name—the Great Wealth Mirage—and holds that portfolios designed to last 20 to 25 years may now need to last 40 or 50.

The paper's arithmetic is a retirement-income stress test any sponsor would recognize: a hypothetical $1 million portfolio withdrawing $40,000 in year one, with withdrawals rising 2 percent a year to keep pace with inflation, runs out in year 34 at a 4 percent net annual return—the figure many advisors treat as prudent—and in year 43 at 5 percent net, while over the 50-year horizon the paper tested, with 2 percent inflation, 6 percent net was the lowest return that avoided depletion.

Dunham reaches for groceries to show how small price increases accumulate: according to the paper, a couple with $100,000 in disposable income, spending 9.7 percent of it on food at the 2025 USDA average and facing food prices rising 3.55 percent a year—its long-run figure based on Bureau of Labor Statistics data—would spend nearly $2.6 million on food over 50 years. By year 50 that annual food bill alone would be $107,191, more than the couple's starting income.

From those scenarios Capizzi proposes what he calls the Retirement Real Return Rule: for retirements of 40 years or longer, portfolio returns may need to exceed inflation by about 4 to 5 percentage points. The paper lands amid work already trimming the headline number, with an estimate it attributes to Visa projecting that after subtracting liabilities and accounting for retirement spending, charitable bequests, taxes and fees, roughly $36 trillion of baby boomers' $93 trillion will pass to Gen X and millennial heirs over the next 20 years.

For plan sponsors, the assumption written inside the defaults matters more than the projection. If a 30-year retirement is the planning number while a 40- or 50-year one is the realistic case, withdrawal rates, glide paths and lifetime-income menus are all calibrated to a horizon that has moved. That is the same gap this publication flagged in September, when forecasters converged on a 2027 Social Security raise that recipients were expected to call too small.

The projection is contested, the model is Dunham's own, and it arrives without external validation, so a single paper will not reprice a $93 trillion expectation. It does, though, hand a plan committee a number to test against: a 40- to 50-year horizon its stated assumptions may not be built to fund.