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Leaving an Inheritance to Your Children… The Height of Foolishness?

Category: Financial and taxes in retirement

November 8, 2014 — We retirees have a strong desire to leave something for the kids once we go on to baby boomer heaven. A recent study by the Population Research Center at the University of Texas found that 86% of people aged 59-96 expect to leave an inheritance to their kids and grandkids. In reporting that study the New York Times article, “The Children Will Be Fine: Spend Their Inheritance“, called this perhaps “the height of foolishness”. Let’s take a look why.

About half of baby boomers are concerned they won’t be able to maintain their standard of living in retirement. Yet the 86% figure from the University of Texas study shows that even people stressed by their retirement finances still hope to pass something on to the next generation. The irony of this is shown in the same study, published in the journal “Gerontologist”, which found that only 45% of children aged 40-60 expect to be left money from their parents. The conclusion of the author, Kyungmin Kim, shows a disconnect – parents deeply want to leave something for the next generation, but the children don’t usually expect one. The Times article raised the point – if asked, many younger people’s advice to their parents would be – spend it mom and dad!

Save it for the kids - or enjoy that Caddy now!

Save it for the kids – or enjoy that Caddy now!

We have done a lot already
Most baby boomer parents have already made large sacrifices for their children. We have often paid college tuition, helped our children get started in life, and supported them to adulthood. Of course if we are well off and can make it through retirement without financial distress, it is only natural to want to make things easier for our children with an inheritance. But the article raises a good point – if we are worried about our own financial future in retirement, think about ourselves first. Our inability to do this explains the reluctance of many people to enjoy the fruits of their labor, or consider a reverse mortgage. Homes represent the biggest part of many retiree’s portfolios, and for many people a reverse mortgage might be the financial salvation to a very dispiriting quality of life in retirement. Yet most people are unwilling to consider this tool, probably because this irresistible urge to bequeath our assets interferes with our own happiness.

One further point from the UT Study interesting. Adult children who have been financially supported while their parents were alive had a higher expectation of getting one. Sounds like entitlement to us.

What are your thoughts about leaving something to your heirs? Do you have formal plans in place? Do you have special considerations that have been made? Or do you intend to spend everything you’ve got, as it’s time to take care of me! Please share your thoughts in the Comments section below.

Posted by Admin on November 8th, 2014


  1. Interesting issue, but I’d say it depends on so many factors that there isn’t a one-size fits all answer to this topic. Some of us inherited something from our own parents, and it was probably very helpful to our lives. If you’ve got the money to leave an estate and don’t end up needing to deplete assets for end-of-life medical care or nursing home care, great. If your kids turned out well and aren’t leeches, it makes sense to make their lives easier if possible. However, It doesn’t make sense to go out and blow assets just to avoid leaving an estate. Likewise, it doesn’t make sense to eat cat food in order to try to leave Junior some money.

    I have a Will in place. If I die tomorrow, my kids will be in good shape. If I die in 30 years, they won’t inherit much.

    At least to my face, my kids have told me they want me to spend my savings and enjoy life. I would definitely be annoyed and probably spend more if any of them had the chutzpah to look at my accounts as their rightful inheritance.

    by Sharon — November 9, 2014

  2. No one should feel entitled to the money of someone else even if it is our parents. I do not expect to inherit anything from my parents and even though they are well off, how do I know that they will not deplete their assets if they need care at the end of their lives in assisted living? Their money is for them. We have longevity in our family. The men and women live to be nearly 100 on both sides. Because my parents do have their own assets, I am lucky still, because they can afford their own care without asking my brother and I for financial assistance. I feel blessed for that. Many families are not in that position. My paternal grandmother needed nearly her whole portfolio because she lived to within four months of being 100. My brother and I each received a small inheritance from her–very little was left at the end of her life. Lets get our priorities straight. I would rather have her back in our lives then her money even though I could use the money and my prospects for a robust retirement are small.

    by Jennifer — November 9, 2014

  3. I think most of us are trying to make our retirement savings last for the next 30+ years. Thats what drives my decisions on spending, not how much money I will be leaving the kids. I may be more focused on their inheritance when I’m in my eighties if I should live that long.

    When we sat down with my Father’s financial advisor after his death we found that he had been living on SS alone and had not been pulling $$$ out of his IRA for several years. He may have been preserving that money for us, we’ll never know?

    by Jim — November 9, 2014

  4. We worked really hard to save for retirement so we would be able to travel and be comfortable. Our plan is to enjoy life and if there is money left for our kids and grand kids that will be nice. We have also decided to use our money to spend time with our children and to help them out now. That being said, we will not scrimp on ourselves to leave money to them.

    by Kathy — November 9, 2014

  5. My sentiments are in line with Jim (and just about everyone else). I don’t know how long i’ll live. As a result, i’m living carefully so that my money lasts and i don’t become a burden to my children. It would be wonderful if, when i die, there’s money left over. I would love for my children to have an inheritance. But that’s not why i’m living as i do now. That said, i will try to use my money wisely AND have fun in my retirement.

    by ella — November 10, 2014

  6. Jim, if your dad didn’t take his minimum required distributions from his IRA, I’ll bet there were some serious penalties to pay. I take mine but that doesn’t mean I have to spend it all. I’m not scrimping, but it would be nice if something is left for my children and my grandchildren. Although both of my children have told me to spend the money and have a great time.

    by Linda — November 10, 2014

  7. Linda,
    My Father was with a well known brokerage firm so I assume he would have been advised on the RMD. I’ll check with my brother who was the executor of his will. Thanks

    by Jim — November 10, 2014

  8. Ditto’s Ella. I think we could be good friends, if we ever crossed paths………
    As I read this blog, I have mixed feelings. I have a legacy, in some regard, due to the diligence of my grandfathers’ example. He lived to 101 and grandma to 98. They both spent about 5 years or so in a full service nursing home. Nonetheless, he left each of us 36 grandchildren $500.00; and his own children shared the proceeds from their home, which of course was paid for. I don’t know what the “greats and the great-greats” received. He was never really wealthy, just a good steward, living a life of “moderation.” I thought that was totally incredible!! Of course, my own father would like to emulate the example of his father, yet has made some real poor choices regarding investments. (ie. Ponzie schemes etc.) I really don’t think he has much left.
    Now for us…………….sometimes I think a charity would be a better choice for any of our “leftover” funds, as my kids sometimes act and seem rather “entitled.” At other times, I want them to realize the benefits of their parents’ conservatism and stewardship. None of us can possibly know the future regarding the economy and inflation or any other thing that could damage or increase our portfolios.
    We do have a revocable trust in place in our current state, however once we change our state residence, I’m fairly certain that a will might be more cost effective and manageable, since we no longer have any minor children to take into consideration. Anyone else dealing with a “revocable trust?” Will we be able to switch it to just a will?

    by Caps — November 10, 2014

  9. I remember how difficult it was when we were young and bought our first house. I counted pennies. When we inherited from our parents, we were financially sound and the money was something extra. Well, we decided we are not going to leave kids any money. We help them now by paying their student loans, down payments for their houses, and even save enough money for our grandson’s college fund. We are putting money for our new born grand daughter. Each year we give kids very generous cash gifts for Christmas so they can make major purchases or improve their homes. We told them we will spend the rest of the money on ourselves and when the time comes, our bank will have zero balance. We help kids when they need money the most. Our friends think we are doing too much for kids but my kids never take us for granted and they do need financial assistance at this stage of their lives. What’s the point putting extra money in stocks when we can really help our kids? We are blessed that we are able to do this at this stage of our lives.

    by Mingchen — November 11, 2014

  10. Mingchen,
    How wonderful that you blessing your children and grandchildren in this way. I agree that now is the time our children and grandchildren need the cash most. If i were financially and emotionally secure concerning my future, i’d do the same. It sounds as if your family relationships are healthy and sound. I’m happy for you!

    by ella — November 11, 2014

  11. dear Caps,
    Thank you for your kind words. It would be fun to cross paths! I have been meaning to ask you if you would be willing to contact me via email concerning questions i have about Tellico Village.
    If yes, i’ll list my address in a future post. If this is not a good time for you, please don’t feel obligated. Sending warm greetings.

    by ella — November 11, 2014

  12. This is a very enjoyable and thought provoking topic.

    40 years ago my Dad (in his very concise and to the point manner) gave me one piece of advice on this issue. He said, “Son, write only one bad check in your lifetime, bounce the check to your undertaker.” In essence, he was telling me to break even at the end of my life.
    Like my Dad, I’ve tried to raise my children so they could take care of themselves and their families…… Now that they have moved out of my house, it’s up to them.

    by Dave C. — November 11, 2014

  13. My kids can split whatever is left over – if anything. I had the pleasure of paying for the burial of my father only because he had nothing left. It’s not about the money, it’s about family.

    by John H — November 11, 2014

  14. The best thing you can do for your kids is to arrange your life so your kids are MANAGING your care, not PROVIDING your care. Speaking as 60 year old who has to provide my Mom’s care (while dealing with my own aging and health issues), had she done what we told her to do we’d be making sure others were taking care of her, not doing it ourselves.

    by Mary M — November 12, 2014

  15. Hi Ella;
    I’m not certain if TopRetirements has a “policy” regarding private emails, yet I am game. Ask me anything you want. I hope I can help.

    by Caps — November 12, 2014

  16. Since i have a medically fragile adult son and no outside financial assistance, I worked years past my pension retirement date to allow the money to provide him with financial security should he outlive me. It my responsibility gfor bringing him into the world.

    by maureen — November 12, 2014

  17. As a pre-retiree with no children, who got no inheritance from my parents, and who now lives alone, I can’t speak for those who feel they MUST leave an inheritance- we are sort of ‘programmed’ for that. But, my first rule is: I worked hard for the money, I should be able to spend the money on me-ALL of it. Rule #2-refer back to Rule #1. My parents had little money, but they managed to raise 3 children, and help us all financially a little bit along the way. I paid for all my own college, as did my brothers. The best gig I ever had was living at home with mom and dad, rent free with utilities, food etc.paid for, while going to college:) I paid for my home, my cars, and everything else I have. I couldn’t depend on my parents because they died quite young and had no money. If I had had children, I would have raised them as my parents raised me-learn to take care of yourself, because you can’t always depend on someone else to take care of you, And: always remember you are not ENTITLED to anything. Perhaps some may think I am selfish, and I apologize for appearing so. Instead of money, perhaps what we need to leave children with is a good sense of family, the ability to love and care for and about others, the ability to learn, listen and get an education, and to NOT feel entitled to anything except what they have worked for and earned themselves. Neither my brothers nor I were ever saddled with taking care of our parents, they both had insurances to take care of what needed done, and they never lived in an assisted living facility or with my brothers, or with me. There is no longevity for me, and I have little to retire on besides social security-but, I will be debt free in a few months and have learned to adjust my lifestyle-a topic that deserves it’s own blog! So, I will spend any inheritance on myself and my needs, until my life ends. Whatever is left will go to my brothers, or a charity as I see fit. Lots of mixed feelings out there..quite interesting!

    by Carol — November 12, 2014

  18. We inherited the proceeds of my MIL’s house after her death. That’s all that was left after 15 long years of round the clock in-home care (to age 95), which we managed with up to three caregivers. My husband lost a lot of sleep struggling to pay her bills plus his disabled brother’s mounting expenses (at her direction, with her money, although we tried to limit the outflow of cash–talk about entitlement). It would have been 1/3 the cost to put Mom in a nursing home, but it would have been cruel, given her total blindness (nonfunctional and frail) and 3/4 deafness. Her whole life became books on tape played LOUD, a subscription reading service, the Ear, that read major magazines and newspapers, and tv, and visits from us. She refused to let us get a reverse mortgage for her back when terms were more generous, so we had to mortgage her home, our home, and my sister-in-law’s home. Good thing she refused, too, or we would never have been paid back from the sale of her house. We were left feeling that we had done everything we possibly could to make her final 15 years comfortable for her, so the extra cash is a nice payback for some very stressful years.

    by Sandra — November 12, 2014

  19. I don’t necessarily have to leave something for my children but on the other hand I’m lucky enough to have worked at a time when there were pensions which combined with social security and a paid for apartment leaves me totally fine without dipping into assets. So the money (not much but what is there) should be theirs for which I’m happy. What won’t make me happy is having a prolonged illness of any kind, having to end up in a nursing home or some expensive end of life place with no quality of life whatsoever and having to spend money on living a horrible existence as opposed to having the ability to say “NO, I WANT TO END IT NOW”. I don’t want to spend a penny extending a (for me) bad life. I don’t say this is true of anyone but me but do resent that under present laws I don’t have the right to check out when I’m ready. Why should that be so?

    by JudyC — November 12, 2014

  20. I agree 100% JudyC. I hope “Death With Dignity” laws spread to many more states. I believe this issue will be a hot topic with aging baby boomers.

    by Bubbajog — November 12, 2014

  21. Administrator: Bubba’s and Judy’s comments warrants a blog on this subject. I bet a lot of us have very strong “Death with Dignity” feelings, whether pro or con. Having been through the death of a spouse from a decade+ degenerative illness, I vote PRO (and I support the national lobbying organization). Seems like all those 60’s and 70’s protesters could arise again…

    by Kate — November 13, 2014

  22. My father died at age 92 leaving his remaining 8 children (two of my siblings predeceased him) with a handsome inheritance, though divided eight ways, it wasn’t as significant (my younger sister jokingly said if mom and dad had practiced birth control and there were fewer of us…well you get the picture). The inheritance from Dad I have not touched (he died in 2009). I have it growing in an investment account and along with SS, pension and 401K, I won’t starve when I retire. I hope to not touch the assets and live on SS, pension and 401K, and when the time comes, leave it to my two daughters. BUT, I am not going to curtail what I want to do in hopes of leaving them more. They are adults and in a much better place financially than I was at their ages. I raised them. They are on their own. Still trying to decide where to live…close to daughters in North Carolina, or stay in Delaware. Too many decisions.

    by Mary K — November 13, 2014

  23. My wife and I received small inheritances from our parents, but it served as a catalyst for our three (3) children’s college educations. In return, our children excelled at the university level, and all graduated with honors. And luckily, my wife and I did fairly well within our careers. Now that we’re retired, we plan to live “comfortably” without straying too far from the philosophy of “what got us here in the first place.” Still, we plan to leave something helpful to our children and grandchildren upon our passing… much like our parents did for us (strictly a labor of love).

    Disclaimer: My wife and I firmly believe that “One size doesn’t fit all.” Still, isn’t it funny that many of our parents thought that our Baby Boomer generation was “going to heck in a hand-basket.”

    by SeaDragonHM12 — November 13, 2014

  24. Caps,
    If you’d be willing to contact me, please email at at your convenience and i’ll get back to you.

    Looking forward to our conversation,

    by ella — November 14, 2014

  25. Ella,
    Watch for an email from Gloves tomorrow.

    by Caps — November 15, 2014

  26. My grandparents worked hard and invested well, leaving my siblings and I a fortune and we all also work hard and have also increased our wealth by many folds. I instilled in my children to work hard, save hard and invest wisely. They are all hardworking and have started to invest.

    I shall leave all my parents’ and my hard earned money to my children and grandchildren. Leaving them my money will not make them lazy. They will be able to have a comfortable life and will be able to provide well for their children ie my grandchildren and it will be a good start in life for them.

    I do give to public charity but I believe strongly that charity must start at home. Many families become homeless when the breadwinners lose their jobs and it will be sad for my grandchildren to be in this situation because I decide to leave the bulk of my money to public charity instead of them.

    by MarkTan — January 8, 2015

  27. What’s missing in this conversation is a working crystal ball. I have no way of knowing how much I can give to my children and grandchildren now, how much I can use to enhance or maintain my lifestyle, and how much I will need in the next 20 years (I am 82) to not need help from my children. This failure of precognition is the problem for most of us. If you have come back from the future, please clue us in on what to expect.

    by Sallie50th — March 30, 2015

  28. I love your sense of humor, Sallie! Realism always makes for the best humor.

    by ella — March 31, 2015

  29. What would some of you do if you were to receive an inheritance during your retirement years? I am due to get an inheritance from the sale of my Grandfathers farm. He died in 2007 at 110 years old. Family wouldn’t budge to sell the farm until two of the brothers recently died. There are only two living children and both are ill. I am a grandchild who inherited 1/5 of the sale. I will get the proceeds in a month. I have no bills to pay off, don’t need anything in particular and house is paid off and some improvements made on it. My only desire is new wall to wall carpeting and a new kitchen floor. Kitchen is somewhat outdated but not really interested in spending the money on that. I am pretty frugal with my money. Curious what others dreams or desires are if they won a small lottery or an inheritance. Also we have no children to help out. I was thinking of buying a small, low cost condo to buy and rent for income. Hub hates that idea. Was thinking of annuity but not sure about that. Could divide the money up to last 15 years and take a monthly income from it. Any thoughts or ideas?

    by Louise — June 13, 2016

  30. Go on a safari to Africa

    by susan — June 14, 2016

  31. Louise, do what makes YOU happy. You never know what life will hand you and frankly, we are all of retirement age…how much time do we have? Live your life and spend the money how you see fit. Enjoy.

    by Mary K — June 14, 2016

  32. Louise, Even if your grandfather was not philanthropic, you might think about giving a portion of your inheritance to a charity whose work might have been appreciated by him. This could be in his memory. As to the rest, since you’re not completely sure about what you want to do, maybe just put it in a money market fund (you can find some online that pay at least 1%) and I bet over the next few months you’ll find a good use for it. The carpeting and kitchen floor sound fine, though.

    by Clyde R. — June 14, 2016

  33. Louise, I’d suggest getting your carpeting, a new car (assuming your current one has some years on it) for reliable transportation, a minor kitchen spruce-up (cabinet doors, countertops, paint goes a looking way!), and the balance into a money market account. Take periodic withdrawals as needed. Take a few thousand and have an estate plan drawn up if you don’t already have one.

    My 88yo father is frugal as well, he has no debt but doesn’t get any pleasure in buying big $ things. Me, I’d throw $ at my passions, and the-one-who-must-be-obeyed and I would travel more, but that’s us, not you.

    by Greg W — June 14, 2016

  34. Maybe establish a small scholarship at the local high school in your family name, in honor of your family’s farm and history in the area? I received one of those small memory scholarships in high school with a write up of the family’s history, and here I am 50 years later still remembering them gratefully! Most schools can walk you through the process, and the cost is less than you think (plus it’s deductible…). With the balance, take care of your desires and put the rest away for a rainy day and for things that can come up in the future. Wishing you a long, healthy and happy retirement!

    by Kate — June 15, 2016

  35. Louise, I have some thoughts on where any “excess” funds might go. Just a few thoughts: Shriners Hospitals, Ronald McDonald homes( both of which have helped thousands free of charge). Homeless Vets, or any of numerous Veterans causes(without Vets, you might not have the same opportunity to spend those funds). Your local food banks, Women’s shelters, numerous animal rescue associations (both domestic and farm animals). The possibilities and places that desperately need funds are endless.

    by Doc Stickel — June 15, 2016

  36. Thanks for all the ideas! There are many organizations that are worthy and needy.

    by Louise — June 15, 2016

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