Skip to comments.More financial bombshells for baby boomers: Donít count on that inheritance
Posted on 06/11/2012 12:32:05 PM PDT by SeekAndFind
Is no age group safe from the fiscal woes of economic near-recession and pending entitlement crises? (Hint: No.) While we often focus on the troubles of young people unable to find employment and just chillin' on the parents' couches, and we're already well aware of the upcoming squeeze on Social Security as baby boomers begin to reach retirement age, here's a fun and exciting reminder from the Wall Street Journal.
For years now, there's been a lot of talk about boomers getting tremendous windfalls as their parents pass on. Many boomers, in fact, have been lagging behind in their savings, betting onhoping forbig bequests, especially since many of them suffered big losses in 2008.
But for a growing number of boomers, things aren't going according to plan. The postwar generation is living longerand many are spending their savings along the way. And, of course, many of them also took a hit in 2008.
The result is that, as a group, boomers likely won’t be getting as much of an inheritance as they hoped. Even worse, far from receiving a bequest, a growing number are tapping some of their own savings to help their cash-strapped parents make ends meet. …
“There are way too many adult children I see who are looking at Mom and Dad’s estate as their ticket to a secure retirement,” says M. Holly Isdale, an estate planner in Bryn Mawr, Pa. “But with people living longer, much of the money is likely to be spent.”
How much longer? Thanks to medical gains, a 65-year-old man has a 60% chance of living to age 80 and a 40% chance of reaching 85. For women, the odds are 71% and 53%, respectively. All of this has made the 85-and-over age bracket the fastest-growing segment of the population. In an era of low interest rates, volatile financial markets, and rising costs for health and long-term care, finding money to cover those years isn’t always easy.
This inheritance-news is just one in a long line of financial challenges and demographic nightmares facing the baby boomers (Americans born between 1946 and 1964) as they near retirement. Conversations about death and mortality, finances and inheritances, are already difficult and awkward enough, and the added weight of ongoing lackluster returns, a poor housing market, and escalating healthcare costs (combined with longer lifetimes) are making it all that much harder.
With adult children still living at home adding to baby-boomer parents’ financial strain, perhaps compounded by their own parents now needing financial assistance… this is shaping up to look like a pretty darn painful demographic shift. Yikes. We need to get some wealth creation and growth going in this economy, stat!
Accounting for nearly one-fourth of the U.S. population, their impact on the economy, government policy and culture is expected to be every bit as profound in their golden years as it has been since their birth. …
According to an article published on The American Dream, a website of social commentary, as many as 36 percent of those in the baby boomer generation have not contributed to a retirement program of any kind. Among those who did, many relied on 401(k)s and investment portfolios that have been seriously compromised by collapsing markets. …
Compounding efforts to build security has been a decade of the worst performance in history of financial markets, impacting 401(k)s and other securities-based investments. “They’ve not grown like previous decades. That’s just the reality,” Siebenmorgen said.
The Employment Benefit Research Institute reports 35 percent of those of retirement age are almost totally dependent on Social Security benefits for income. Only about half the remaining 65 percent have retirement savings of $50,000 or more.
Wow - now that it’s affecting boomers, it’s a problem.
Obama wants to confiscate all inheritances.
The fallout from a disasterous economy continues.
It should always be the other way around, the kids should support the parents in their later years...if this was considered the norm, we wouldn’t have Social Security be the Leviathan it has become.
To my knowledge, it was the norm. FDR used the few exceptions to the rule to gin up support for Social Security.
Gee I better stop counting on it as my folks are 87 & 80 years young. Oh well I better go to work and keep earning a living so that I can pay the Gov.
IMO, FDR was the worst president this country has ever had - LBJ is a close second and Nixon and Obama are struggling for third place. In forcing through the leviathan state, he paved the way for all of the additional welfare state programs that are putting us on the path to fiscal insolvency.
“”The Employment Benefit Research Institute reports 35 percent of those of retirement age are almost totally dependent on Social Security benefits for income. Only about half the remaining 65 percent have retirement savings of $50,000 or more.””
In plain English they are saying that only one third of 65 year olds have $50,000 or more in savings.
They are also implying two-thirds of those 65 year olds will vote for big government handouts.
This is how Obama expects to win. Impoverish the voters and promise freebies.
Even FDR in his 1935 SOTU said that government relief was like administering a narcotic, and that government must “quit this business of relief.” Whether he meant it or not, the fact is, even he recognized the long-term impact of government programs on the populace.
My mom is still with us, and I suspect when she goes, I’ll get some bills. So goes the world.
There is no duty to give anything to the next generation. The parents fed ‘em, clothed ‘em and sent them out into the world.
Their duty is done.
The problem is the size of government. It’s simply not big enough. /Krugman
My mother-in-law is pretty well off, and 93 years old. I always knew she would out live me.
My parents are making some very bad financial moves, and expecting us kids to pick up the pieces. My mom demands a large house (after selling the farm), a baby grand piano, not to mention a new or leased car every few years.
I will support them, I will not enable them.
... typically half those retiring do not retire by choice. Instead, conditions such as disability, death of a relative, downsizing or a plant closing cause them to end their career earlier than planned.
“FDR was the worst president this country has ever had”, NOPE Wilson and Teddy R. are up there in suckage.
This sad article implies that it’s only normal for people to expect some cash from their dead Mom and Dad. And it implies that most “Adult children” can hardly wait. This is what being a “slacker” is all about.
I plan on spending every dime (or at least work on it) before I go. My 18 and 15 year old are aware of this. I’m 54 and I don’t hesitate to pull $3,000 out of savings every now and then for a nice vacation or something I want. It’s not my responsibility to continue caring for them into their 40’s and 50’s!
Her creditors will appreciate that. But legally, if there are no assets, the debts die with her.
Which is what I tell my mother in law. All I want from her is cookies for her grandchildren.
Well stated. I continue to be amazed at the bizarre sense of entitlement displayed by my MIL.
Reverse mortgages (advertised incessantly) will make sure there’s little left to pass on
Their duty is done.
I concur! My father has passed, but Mom is still active and healthy. I encourage her to tap her savings to enjoy her time, and I've told her that I expect nothing but that if she wants to pass part of her estate along that she should skip a generation and leave it to her grandchildren.
Spend it all before you go, Mom.
If you don’t...give it to my kids. They’re gonna need it more than me.
Don’t resent us baby boomers...we put huge surpluses in the SS trust fund, only to have it robbed and handed to the welfare generation coming up behind us. And the many of us saw the handwriting on wall as we watched it being robbed year after year and started saving just in time. Plus we’re really not having the grand longevity that the hysterical liberals are trying to panick you with so you’ll give them more and more to steal. In my very small graduating class of 31, 11 are already dead and never collected a dime after contributing for almost 50 years. I lived the good life through my youth, saved what I could afford, inherited a couple of properties that helps, but no cash. And I found that downsizing from keeping up with the Jones and shedding the ‘status symbol’ psyche allows one to live in a frugal comfort zone. My advice to the young is live well and enjoy your children. Travel to ‘must see’ places if you can. But SAVE what you can and protect it. And don’t be afraid of downsizing when you get older. Your needs are going to be much less. I thought I couldn’t live without all my ‘stuff’, but handing all the diamonds, heirlooms, heavy antiques, fancy dinnerware to the children, was a huge relief. Now I just enjoy all my friends and piddle with a few projects...and life is good and the bills are paid..including DSL, TV, and cell. But whatever you do, know that SS is pro’bly not going to be there for you and look to a future without it...it’s gone, robbed, and we don’t know what the jobs market will be so contributors will be limited.
Of the many things I do not understand, giving one’s assets to one’s children is among them.
I have no children (a situation for which I give thanks every day), but if I had had them, I definitely would not give them even a 10th of my assets upon my death. Why should I? Hell, if I had had them I would have bestowed a considerable portion of my earnings upon their care, then they should owe me. No?
In any event, my wife and I have divided our estate into six portions, three for her and three for me. We then have chosen six charities, which will receive what earthly goods we leave.
But obviously, we are in a tiny minority. Most people think they should give their wealth to “the children.” Good. It’s their decision.
And yes, I know the rejoinder: well, if you had had children you would understand. Yeah, sure. My position is based on lack of experience. I just don’t buy it.
A bit of advice to those whose parents are still alive.
Prepare. Get with a tax advisor. Put together an inventory and a plan.
When one parent passes, their assets pass to the surving spouse. When the last one passes, their assets pass to the children. The children are then hit with capital gains taxes that will surprise you. The IRS places a value on everything and there will be assets that you never knew about. And the surviving offspring get hit with the bill.
My mother committed suicide when I was 30. My father died from lung cancer when I was 32. I was married with a couple of babies and trying to start up a new business. Then I got hit with the cap gains tax from my parents assets. It took me a very long time to dig out of that hole. My brothers and I never expected to bury our parents at such a young age and paid the price.
Convince your parents to work with you on this.
Uncle sugar shows no mercy at the funeral.