Generally speaking, their inheritors keep the funds in the market. If the Boomer has a significant amount in their 401K, a fiduciary is just going to tell the next of kin to keep it market, and most people fill out a Time of Death Beneficiary so the account just transfers over to their heirs. Unless they’re in heavy debt or need a down-payment on a house, most people will just keep the account.

I would guess if anything rich people dying is good for the economy. Retired people are generally sitting on their assets in the form of homes they’re not going to sell until they kick the can and retirement accounts in low risk investments. When they bite the dust all of those assets get swept into taxes and to their kids, who probably spend it or at least invest it in the market in a way that is more stimulating than what their parents were doing with it. Old people are stagnant and safe with their wealth which is not good for line goes up.

Would all investments be liquidated rather than just inherited?

It’s not so sudden that anything changes really. People die every day, it doesn’t happen all at once.