Pressurized Environment for Seniors

Senior homeowners are facing pressure as they live on a fixed income in retirement. They fear running out of money as they survey the economic landscape of rising health care costs, inflation, pending tax increases. Then there is the wildcard of longevity risk. As baby boomers are healthy and living longer, and as the first generation to fund their own retirement, they wonder if they have saved enough.

As I interact with Senior homeowners, the issue of leaving an inheritance to the children often comes up in conversation. Parents feel this obligation or perhaps guilt that they ‘should’ leave an inheritance to their children. I point out two things when this topic comes up. First, billionaires like Bill Gates and Warren Buffett are not leaving the vast majority of their wealth to their children. Second, parents are leaving their children a lot more than money, they are leaving them a legacy, which is far more important and impactful.

What do the kids really want?

When we ask the adult children of senior homeowners about receiving an inheritance, the answer is something like “we will be fine, we don’t expect any money, you’ve worked hard for your money, use it how you see fit and be comfortable.” The most important comment they make is something like, “We want you to be OK and not struggle financially.”

Leaving a Legacy

Research conducted on children inheriting money shows there is a 50/50 chance that the kids will blow the money, or go on vacation, buy a new car, etc. vs. investing it and letting it grow so they have a better retirement, which is how the parents want them to use the funds. Then there is the issue of does an inheritance help or hurt the children? Getting an inheritance is like winning the lottery. You come into a lump sum of money and often people end up worse off a few years after such an event.

So, how will you approach this?