Why Gen X should stop planning around an inheritance that may never arrive |
Why Gen X should stop planning around an inheritance that may never arrive
There is a line item in a lot of Gen X retirement plans that nobody writes down.
It does not appear on a spreadsheet. It rarely comes up with an advisor. But it sits in the back of the mind of millions of people in their 50s: Eventually, there will be my parents’ house. Eventually, there will be whatever is left in their accounts. It will not solve everything. It will help.
I understand the instinct. I have spent a career building businesses around finance and how long people live, and this assumption turns up everywhere. It is seldom stated out loud. It is almost never stress-tested. And it is getting less reliable every year.
Start with the number everyone has heard. Something close to $124 trillion in American wealth is projected to change hands by 2048, and Gen X is first in line. About $14 trillion of it is expected to reach Gen X households over the next ten years. Set against a generation that saved a fraction of what the boomers had at the same age, that sounds like a rescue arriving.
It is not. Three things get in the way.
The average is a mirage
Averages do real damage in retirement planning, and inheritance is where they do the most.
Only about one in three American households ever receives an inheritance at all. Across all households, Federal Reserve data puts the average received at roughly $46,200. That figure is performing a magic trick. Households in the top one percent average close to $719,000. The bottom half average about $9,700.
The transfer is real. It is also concentrated. The money is not........