Expect no Inheritance from Your Parents March 27, 2006
There was an interesting article from yesterday’s NY Times about the expectations of receiving an inheritance. According to the article, the majority of the US households (86%) do not expect to receive an inheritance. I’ve read that hundreds of billions of dollars are being passed on every year. However, most elderly Americans can probably forget about passing on an inheritance to their children.
After all, the evidence shows that baby boomers are going to need it: working Americans are unprepared for their own retirement, economists say. They have little savings of their own, and are facing the possible erosion of Social Security and the limits of company pensions…
In 2004 median inheritances — half were bigger and half were smaller — amounted to about $29,000 in today’s money, according to a Federal Reserve analysis of the Survey of Consumer Finances.
The two biggest reasons for the decreases in inheritance are healthcare costs and longer life expectancies. The poor and middle class will spend more and more on healthcare and retirement living, while the small percentage of wealthy families are getting a bigger slice of the inheritance pie. The wealth and inheritance $782,000 is concentrated in the top 2 percent of the richest.
It’s a good idea to live and spend as if you will not receive any inheritance. We shouldn’t have a sense of entitlement about getting things from our parents. Plus, we should feel lucky that our parents will live longer than previous generations. I’m not even sure my parents will have anything left to pass down, but we’re saving as much as we can into our 401k retirement plan since we don’t expect any inheritance. In fact, we should plan on taking care of our parents as they took care of us growing up.
Source:
NY Times: Inherit the Wind; There’s Little Else Left
By EDUARDO PORTER
Published: March 26, 2006