For Most Boomers: No (or Negative) Inheritances

March 12, 2007 by David Macchia

For Most Boomers: No (or Negative) Inheritances

Today’s online Baltimore Sun has an excellent and insightful article by reporter Linell Smith. The articles busts some commonly held myths and fantasies about Boomers including about the immense wealth Boomers are in line to receive- what Smith describes as the “Great Boomer Inheritance.” The article points out that it’s just not true.

Smith cites a 2006 AARP study which found that most Boomers won’t receive any inheritance at all, and if they do it’s unlikely to make a “significant contribution” to their retirement savings. Alicia Munnell, who heads the Center for Retirement Research at Boston College, is quoted as saying that, “Wealth in the economy is extremely skewed: a fraction of the top one percent of the population has all the wealth. Bequests are even more skewed.”

Munnell also goes on to say, “What people expect the typical boomer to inherit is $20,000,” she says. “That’s not a life-changing number. And because it’s the middle number, half will inherit less than that. Most wealth is held by the very, very rich. Even if you have wealth at 65, you will probably use up a lot of it over the course of your retirement and your final estate will not be that big.”

The article delves deeper into other aspects of Boomer inheritances including the phenomenon of “negative inheritances” which arise when Boomer children become financially responsible for their parents’ health care costs, for instance. Visit http://www.baltimoresun.com/features/custom/modernlife/bal-ml.boomer11mar11,0,7387524.story to read the article in its entirety.

I mention this article in the context of my own efforts to get financial services companies to focus on meaningful, candid communications with customers when it comes to retirement. See the March 9 blog entry for more.

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