A recent study of affluent children between the ages of 18 and 22 caught my eye. The study reported that 63% of 1000 people surveyed in this age group said they believe their financial security in retirement will depend in part on inherited money.
Granted, most of the people in this age group are still in college. Very few are yet in the working world and in the midst of their careers so maybe their fears are not yet warranted. But, the survey focused on the “mass affluent”. For the age group of 18 to 40 that is defined as someone with investable assets between $50,000 and $250,000 or investable assets between $20,000 and $50,000 with annual income of at least $50,000.
What I find quite interesting is that of the 18-22 year old age group, many believe the inheritance will come from someone other than their parents. 17 percent think it will come from friends or from grandparents. Another 14% think other family members will leave them something.
Much has been written about how the children of baby boomers will be the first generation less well off than their parents. There are many reasons for this, from overwhelming student debt to fewer job prospects in a changing economy to people living longer and the belief that Social Security and Medicare won’t continue to be the safety net they have been for past generations of seniors.
At the same time figures have put the amount of money to be passed to the next generation over the next 30 years at $30 trillion just in North America. However, with people living longer and the cost of long term care looming and continuing to climb, younger generations who are counting on an inheritance in retirement may have to wait longer to get it.
We have seen many a client in our office in their 90’s or beyond who have children in their 60’s, 70’s and even 80’s who are well into their own retirement. The study is not all that different than the many cases in which parents are helping to support children and grandchildren while still concerned about their own needs as they live longer.