6/19/2012 3:22 PM ET|
Getting an inheritance? Fat chance
If you're hoping for a windfall from Mom and Dad, don't hold your breath. In fact, don't count on your parents' savings being enough to support them. You may have to chip in.
Baby boomers: Get ready for a double whammy.
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 on -- hoping for -- big 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 longer -- and many of those older Americans 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.
For families, the result is often a lot of scrambling, dashed dreams, and conflict and angst as parents and children try to come to grips with the lean new reality -- and divide up a smaller pie.
"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-older 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.
Consider the case of Nancy Becker, co-owner of a small business in Waterbury, Conn. Her parents, Morris and Dorothy Stein, were diligent savers. "But they didn't imagine living well into their 90s," says Becker, whose father died in 2006 at 92 and whose mother died in 2011 at 97.
Becker and her two brothers inherited a house in Vermont from their father. But they spent about $180,000 of their own money -- an amount that exceeds the value of the Vermont property -- to cover living expenses for their mother in the final three years of her long life.
Becker, now 63, says she certainly doesn't begrudge her parents for outliving their savings. The Steins built a thriving plumbing and heating business that now employs Becker and her husband, among other family members. Still, as Becker's in-laws enter their 90s, she worries that "their money is running out, too."
Financial losses can also put a dent in the older generation's reserves. Donald Hoeller, 86, of Glendale, Wis., says he and his wife, Bernadette, 85, had hoped to bequeath "several hundred thousand dollars" to each of their six children. But an office complex in which the couple invested 60% of their retirement savings recently landed in foreclosure and litigation.
So, Hoeller says, "I don't know if they will get anything."
His daughter, Mary Hoeller, 58, says that while she never counted on an inheritance, "times are tough" -- and she now has the added worry that her parents may run out of money. A divorcee who is paying college-tuition bills for the youngest of her three children and wants to help another child with medical-school tuition, Mary Hoeller says her income has declined substantially since 2008.
"I am very frugal," says Hoeller, a mediator in Indianapolis. But "who wouldn't want an inheritance from their parents? It would be a good thing."
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I certainly wouldn't count on an inheritance these days. The medical/insurance industry devised a system to hoover up any remaining funds in the last few years of life. Been there, done that...
Dear MSN, please get rid of the idiot spammers. Thank you.
I agree on the so called 'death tax', but that's not the only thing to worry about. Most estates aren't worth a million anyway. I am a Boomer, and speaking from experience, it's long term health care and ridiculously expensive assisted living homes that are going to drain your inheritance down. Livin long isn't livin large. A lot of seniors who scrimped and scrounged their whole live can be wiped out in no time simply with the cost of keeping them going. I witnessed it with my mother. Those advertisements on the tube showing a group of geezers having'' the time of their life' is pure marketing. Even the nicest facilities can be grim in reality, and the more care you need, the more $$$$ they take. They are good at making sure you keep going until you run out of dough, then it's the county nursing home where your demise is guaranteed.
My cheap advice is don't live your life counting on a big bailout from Ma and Pa someday. I hope to leave my two kids something because the thought of one of those homes scares the hell out of me. Sitting in a hall in a wheelchair looking grim, while my lifes finances are being bled, and while some no speaky the English caretaker has to wipe my rear end, is living way too long as far as I'm concerned. Anybody who has dealt with these homes knows where I'm coming from. I'm not going down that road. I'll drink until my liver blows before I end up there.
if the system isn't working on ANY level, shouldn't our genius politicians figure out how to modify the system to fit our needs? Or should we just hope more of us die inobtrusivly , without costing"the system"anything?
I continue to hear a common theme within articles like this and that is that Boomers created the mess we are now in and have no right to complain when the government wants to tax them to fix it.
Yes the Boomers did create this mess, we created it by getting jobs, working long hours at those jobs and paying the taxes that supported all the socialistic programs set up at the end of the great depression and since.
Now it is time for the next generations to do the same for us and they think for some reason it is unfair for them to do so.
Here's to all you whiners - shut up, get to work even if it is at a job you don't like, and quit blaming someone else for the hardships of life, Nobody owes you a thing except the right to go out and bust your butt so get at it and quit waiting on someone to give you something you didn't earn.
My parents died when I was a kid so there was never any expectation of an inheritance - except maybe the gene for heart disease.
Sorry to say, it is their money and they have a short time to live, I think they should enjoy what they have worked their entire lives for with the few years they have left. It is not their fault that their kids haven't been smart......
Good news all around in this wonderful Obamaney-Economy!
Keep fiddling while it all burns down.
End this traveling panhandling minstral show Mr Bojangles!
It just keeps getting worse and worse leading up to the end of it all in November!
Hey Guys- guess what?
Its already for more CHANGE & HOPE again!
One thing that the poor could do is try to get some investment groups together, and set it up in a legal manor where they would put a small amount in every week, or month to be invested!
they would be able to grow ; it could be done with any number in the group, like ten people, or one hundred, or five hundred, as long as they did it legal to protect the members.
example: if twenty people each put twenty dollars each week they would have 400.00 dollars in the group, in the first month it would grow to 1,600.00 in two months it would be 3,200.00 this might not sound like a lot of money, but they could eventually find a way to invest it, like putting a down payment on a house, that could be rented out for six hundred dollars per month, if the mortgage was 500 it would start to pay for its self with a hundred left for possible expenses as they acquire more money they could buy another, these could go up in value If they pay them off it would be positive cash flow that could be invested, or held for investment, when they owned forty houses, paid for they would have positive income of around 24,000.00 dollars each month; these twenty people could have income that would help them live better!
Yeah, the boomers are the ones that defaulted on their mortgages. Boomers are supporting two generations - their parents and their children. Now they're blamed for the economy.
The only certain thing in life is the stupidity of online posters.
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