Retirement Myth #2: I Am Going To Inherit Money From Mom And Dad

BOSTON (CBS) – The reality is there may not be a lot of money to inherit.

And the very worst case scenario is that you may be helping mom and dad financially in the future because they are living much longer. And their wealth may be consumed by medical or long term care costs or they suffered setbacks in the stock market or real estate market in the last 15 years and have not recovered.

Today’s retirees are wealthier than previous generations and the media has been reporting for years that there is mega money coming, the greatest intergenerational wealth transfer.

According to the latest Survey of Consumer Finances produced by the Federal Reserve, if your parents were in the top 5% of wealth you will likely receive over $1 million, the average for the next 45% is $183,000 and $68,000 for the bottom half of households.

It will be distributed unevenly much like the wealth in the US. Most of it will go to the very wealthy. The study estimated that two-thirds of Boomer households will receive some inheritance over their lifetimes, with a median amount of $64,000.

So you can reasonably assume you may inherit money from your parents but the reality is it will probably not be very much. $64,000! I know is not chicken feed but let’s make some assumptions here.

You didn’t save very much because you were banking (pun intended) on mom & dad. So you and your spouse have joint Social Security benefits of $40,000. You have some savings which amount to $50,000 and your house which still has a mortgage. Oh and the inheritance of $64,000.

You review your budget and to maintain your life style you will need $55,000 a year. You will deplete all of your savings and the inheritance in about 8 years!

You need Plan B. Start to save for retirement now.

………………..

You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee’s Money Matters newsletter here.

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