Should You Count on Inheritance When Considering Retirement Funding?

I am getting to where I find these surveys almost silly and ridiculous...

Should You Count on Inheritance When Considering Retirement Funding?

I am getting to where I find these surveys almost silly and ridiculous. First, they interview 1000 people as if that is a real sample size representative of America. Second, some of the metrics don't make sense. However, they are useful because they bring up good discussion points. Here are survey results from Merril Edge.

".... according to new data from Merrill Edge, which found that a third of "mass affluent" Americans are waiting on an inheritance to achieve financial stability.The study includes responses from 1,000 participants and defines the "mass affluent" as those with investable assets between $50,000 and $250,000."

Mass affluent defined as individuals with assets between $50,000 and $250,000? I am not even going to try and dissect that one. I would define affluent much differently. However, I digress.

The question is...should you depend upon inheritance as a part of your overall retirement plan?

I have found that people treat inheritance 1 of 2 ways. First, it is taboo to even think of considering it. After all, you look like an opportunist banking on your parents dying in order to help fund your retirement. Second, your parents have held the family assets as a secret thus leaving their adult children in the dark. I would suggest that most adult children don't have a clue as to what their parents have in retirement assets. That in itself is a whole other topic.

Why not add it to some degree to your overall retirement plan expectations?

After all, you could have $1,000,000 in the bank today and not be able to count 100% completely on it being there at retirement. Everything is a speculation when it comes to retirement planning.

Don't fall prey to the guilt of considering financial gain because your future inheritance. Truth be told, most parents are glad that they can leave something for their kids or even the well being of their grand kids. Obviously, it comes down to where your heart lies. The highest percentage of people are not wishing that their parents die for them to gain financially.

Now, I wouldn't be banking on your inheritance to 100% care of you completely. Be smart about projections of what may or might not be there. If you don't have any clue what might be there for inheritance you are counting fools gold if you are even remotely considering it in your retirement calculations. If you add these numbers in they need to be scaled down and conservatively considered.

Remember, retirement assets, both present and future, are no more guaranteed to be there then a potential inheritance. It makes sense to consider them to some extent in a future retirement calculation.

Comments
No. 1-3
JosephC
JosephC

Agreed

BobBrooks
BobBrooks

Editor

@JosephC - Obviously a long-term care event could wipe out any possibility of an inheritance just like a market crash could do the same thing to a retirement portfolio. I think you can do it as long as you are realistic and extremely conservative with your assumptions. I wouldn't include it as a means to provide for your day to day expenses . That would be way to big of a risk.

JosephC
JosephC

I guess I'll chime in here and say I don't think you should count it in your retirement planning for most people. There is no way to know what your parents may or may not need of their assets in the last years of their life e.g. assisted living, nursing care, and know way to know how long those expenses may last. Hopefully they planned well enough that you will not have to help pay for these expenses. Should you receive an inheritance it should be treated as an unexpected and undeserved blessing, and hopefully one you may use, preserve, and pass on as well. I would never want an elderly parent to feel they needed to forgo medical treatment and related expenses in order to fund their kids retirement plans. Kids should plan on going it alone on their financial planning and not count on outside assistance. If an inheritance is received no one will complaint about the unexpected blessing.

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