Baby Boom Wealth Transfer

[SteveL]

A couple of years ago American Demographics estimated that the Baby Boom generation would recieve $7 Trillion via inheiritance. In my case, my mom passed last year and left my sister and I some bucks. To my sister it is everything she has, but to me it was just some additional funds. My wife and I might see a larger amount via her parents. To my wife's brothers, it will be all they will have, and for us again, just more.
I wonder if others see these windfalls coming down the road, and whether the windfalls will/might really change their ER prospects/expected lifestyle?

 

[mikew]

Same thing is happening in Japan. But the system is a different. My wife has a brother so since he is the first son he gets almost everything.

It’s not like I was doing the mental math with the parents money. But being American, I had troubles understanding a system where my wife is out in the cold because she is a woman. Second sons are also out.

My wife couldn't see any problems with the system. Her attitude was just as annoying for me. Now I understand her point. The son’s family all four of them are jammed into about 450 sqft (2 bedrooms + kitchen living) on the second floor of the parents' house. They have to take care of her parents until they pass away. The parents will probably be around another 20 years. 

 

[grumpy]

I inherited a modest amount from my mother. My wife will likely inherit a slightly larger amount from her father. We never planned on receiving anything and it really will make no difference to our situation except to make it easier to fund college costs for our grandchildren (if we ever have any) which we planned to do anyway. We have good inflation indexed pension income and can support our desired lifestyle with a < 4% SWR from our investments without counting inheritance.

Grumpy

 

[Martha]

Looks like not such a big windfall after all: http://www.clevelandfed.org/Research/com2000/1001.htm

 

[JPatrick]

Looks like not such a big windfall after all: http://www.clevelandfed.org/Research/com2000/1001.htm

That data is about as grim as I've seen

 

[kz]

Modest amount from my parents. (father is deceased) We'll probably invest it since we don't need it. Eventually we'll use it towards an extended family vacation or grandchildren's educations.

Nothing from DH's parents. They spend twice the amount of money they have coming in each month and are within a few months of being broke. Not quite sure what their plans are once they get to that stage.

 

[charlie]

My mom, bless her frugal 89 year old heart, will pass on enough
to increase my financial assets almost 50% ..... enough to raise
a marginal situation to one more comfortable. This will allow me
to help fund the grandkids education and leave something for
my kids as well.

Cheers,

Charlie l

 

[REWahoo]

The inheritance received from my parents increased our net worth about 2%. On DH's side, we're looking at less than 10%. Not very significant to our total retirement nest egg.

REW

 

[Nords]

... but to me it was just some additional funds. 
I wonder if others see these windfalls coming down the road, and whether the windfalls will/might really change their ER prospects/expected lifestyle?

I inherited an amount of about 2% of our retirement portfolio from my grandfather.  It's in my own "brilliant investor" brokerage account where it's proving that high volatility & high returns do not necessarily beat out index funds.  (But any day now I'll finish that "ultimate small-cap value stock" screening tool.) It's also helping me get over Unclemick2's testosterone-poisoned "What if?" ponderings.

Lately I see it as a charitable-donations account.  I'm not going to stop world hunger in its tracks but I might pick up the textbooks or a semester's tuition for a worthy teenager.  It's also a great source of funds for those moments of outrage when you feel that somebody oughta DO something.

This brings up a good point about parental estate planning.  My grandfather passed his estate to his only son, but Dad asked Grandpa to include a disclaimer with us two grandkids as contingent beneficiaries.  That way Dad could take the money if he felt he needed it but could let it pass right by him if he didn't.  When our kid reaches the age of maturity we're thinking of asking our parents to insert the same clauses in their wills.

 

[sgeeeee]

My father won't be leaving my brothers and I a sizeable inheritance.  He spent his career working in the coal mines.  He was focused on gaining a pension and medical benefits for his family.  The UMWofA has one of the best negotiated medical benefit plans I've ever heard of.  When my mother went through her futile struggle with cancer, the union medical benefits were about the only comfort we had.  Everything was paid for.  His pension is more than adequate for his needs.  My brothers and I won't have to worry about his welfare as he ages.  He and my mother were both frugal and generous and provided a stable, happy environment to grow up in.  They did find a way to save enough to support all of us through 4 years of college -- even though neither of them had ever been themselves.  My brothers and I were able to leverage that education and family stability into very comfortable, stable lives for ourselves and our family.  I guess I feel like I alread got my inheritance and it's a pretty good one.  

 

[shiny]

My parents (the first year baby boomers) got a chunk o' money from my grandmother (still living) and promptly spent it ALL on an RV. They tell me that the only thing I can count on from them is not to have to pay to take care of them.

 

[BigMoneyJim]

(article)

The magnitude of this effect can be gauged by assuming that parents are generally 25 years older than their children and taking the ratio of those aged 35–45 today (the boomers) to those aged 60–70 (their parents).

Uh, what? That's the first time I've ever been lumped in with baby boomers. I'm usually in a gray zone between generation X, generation Y and echo boomers.

Anwyay, my granddad fought in the pacific in WWII, and I consider my parents (58 and 61) baby boomers. I was born in 1970. I try not to think much about inheritance because it's a result of something I'm not yet emotionally prepared to think about, but I don't expect much. In fact I've recently considered that I may be helping support one or both parents later, or perhaps my granddad sooner.

I don't recall anyone ever discussing it with me, but I'd be perfectly happy if all of my family were able to spend all their money before passing away while avoiding not having enough money. (Die Broke)


I'm still 10-20 years from retirement and not making specific plans yet, but in the planning I do I don't presume any inheritance.

 

[JPatrick]

My father won't be leaving my brothers and I a sizeable inheritance.  He spent his career working in the coal mines.  He was focused on gaining a pension and medical benefits for his family.  The UMWofA has one of the best negotiated medical benefit plans I've ever heard of.  When my mother went through her futile struggle with cancer, the union medical benefits were about the only comfort we had.  Everything was paid for.  His pension is more than adequate for his needs.  My brothers and I won't have to worry about his welfare as he ages.  He and my mother were both frugal and generous and provided a stable, happy environment to grow up in.  They did find a way to save enough to support all of us through 4 years of college -- even though neither of them had ever been themselves.  My brothers and I were able to leverage that education and family stability into very comfortable, stable lives for ourselves and our family.  I guess I feel like I alread got my inheritance and it's a pretty good one.  

I agree, you got a great inheritance.

 

[SteveR]

Not much in the way of an inheritance coming my way.  My mother is in assisted living and is selling her house and burning through her savings to fund her living expenses.  She is 84 and is in decent health so we expect her to be around for a while.  This means that her $35k per year assisted living apartment charges will have to be funded for several years.  We figure she will have at least 10 years worth once she sells the house and combines that with her other stuff.  That leave next to nothing but none of us kids really needs anything; we just want her to use what she needs to be happy and healthy.  Her teacher's pension and a small survirors pension from my father and SS is all her income.  She has some minor other stuff in CDs and bonds but that won't last more tha a few years.

She is typical of her generation, she feels very badly she will not pass on some assets to the next generation.  We keep telling her that she needs to think about her needs and wants first and to not worry about us.  DW parents don't have much and her other sisters are in far worse shape than we are financially so she is not counting on anything there either.  We are on our own and that is the way I have always looked at it.

My kids and her kids on the other hand could turn into a bunch of buzzards riding the air currents looking to pick my dead bones once we are gone.  Our trusts cover the needs of the other until we are both gone and then the trustee will divide whatever is left to them.  

 

[Cal]

My parents (1st year baby boomers) years ago received their inheritance (which was slightly more than burial costs for their parents) and it's long gone. Unfortunately, they are the ones the articles are describing when they talk about boomers cashing out the equity in their home, saving 0% and yet still think they can retire in a few years.

I expect my inheritance to be negative. (My sister and I are already funding an IRA for them. We told them we were trying to make an inheritance for ourselves.  )

 

[TargaDave]

Some really varied stories here.

My folks are poster children for model retirees. Mid 70's, married 54 years. They have a healthy portfolio that grows every year since they never touch it (pension & ss). My father is a retired physics professor and he still consults, works in the lab and plays tennis 3 days a week. College funds for the 4 grandkids.

Whatever we might see will get passed to our kids and college funds for future grandkids.

 

[farmerEd]

Inheritance? What inheritance...I am just hoping I don't get the bill from the undertaker!

Kidding aside, can kids (beneficiaries)every be held legally responsible for parents debts? I have just assumed that the "estate" has what it has, and any bills left over are just tough luck for the creditors...correct?

 

[Cal]

Inheritance? What inheritance...I am just hoping I don't get the bill from the undertaker!

Kidding aside, can kids (beneficiaries)every be held legally responsible for parents debts? I have just assumed that the "estate" has what it has, and any bills left over are just tough luck for the creditors...correct?

I sure hope so. The bank will get my parent's house. Not even sure if we'll get the cars. Hopefully, my parents will live long enough to be a financial burden on me. They will be lucky to make it 5 years in retirement without - how did they put it in the Millionaire Next Door? - "economic outpatient care" from me and my sister.

 

[Nords]

I'm usually in a gray zone between generation X, generation Y and echo boomers.

I was born in 1970.

Hmmm... doesn't that make you a slacker?

 

[JohnP]

What inheritance, indeed!  Dad (88 yo) is in a nursing home - living on SS and (now this month) a VA stipend from service in WWII.  His "Die Broke! at 83" plan basically worked - leaving a reverse wealth transfer. 

Mom and stepdad are 'keepin on truckin' at 84 squeezing every nickel for all its worth - their savings (mostly CDs and a small house) is intended to be split six ways. 

JohnP

 

[BigMoneyJim]

Hmmm... doesn't that make you a slacker?

That sounds about right!

 

[unclemick]

No inheritance here either - Father died in 89 - Mom lives with us on SS - maybe 50k in bonds/cash to split two ways - if it doesn't go to a nursing home in the end.

 

[VoyT]

DH's folks left a modest inheritance, which became even more modest once it was split among the kids; I received a small one from an aunt. My DM, who struggled financially most of her life, left very little. My true inheritance was her insistance that I get a college education.
DH might see something from one of his relatives (who never married and has no children) but I'm not counting on it. I suspect the bulk of those assets will have been left at the local liquor stores and bars ...

 

[laurence]

I'm the step-kid, so's DW, 3 out of 4 parental couples (my mom and step-dad, my dad and step-mom, her mom and step-dad) have significant assets, and we are pretty much guaranteed to get none since they will pass on to the "real" kids. I'm just glad they are financially responsible so we don't have to pay LTC out of pocket.

 

[Eagle43]

No inheritance here. Dad's been dead for 20+ years; mom has very little. DW's parents will need every penny for long term illnesses.

Also, during my lifetime, I have had very little assistance from either side of the family. Most of my siblings have gotten money from them for various problems, but I never have. About all I got was a place to stay while on leave between assignments. I remember seeing a news item where young baby boomers were telling the interviewer that they "wanted it now." They didn't want to wait until their parents died. They had kids to raise and financial problems and they wanted their inheritance now. Is that the prevailing wisdom these days? I hope not, but it wouldn't surprise me.