Baby Boomers Have $8.4 Trillion of Inheritance Coming says Report

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While the majority of Baby Boomers have seen their financial portfolio hit hard by the recession, a new study shows they could have a windfall of money coming from family inheritance.

The study, authored by the Center for Retirement Research at Boston College for the MetLife Mature Market Institute, reports two-thirds of all Boomers stand to receive some inheritance over their lifetime – totaling $8.4 trillion at 2009 levels.

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The wealthiest group will receive an average of $1.5 million, while the other end of the spectrum will be left $27,000, an amount that represents a larger percentage of the latter group’s overall wealth says CRR.

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Additionally, the Boomer cohort has or will receive a substantial sum from their parents while the older generation is still alive, increasing the total transfer of assets from $8.4 trillion to $11.6 trillion.  Already, $2.4 trillion has been received, with the median person getting $64,00.

“Regardless of the anticipated amount, any prospective inheritance is uncertain,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute.  “Parents or grandparents who expect to leave a bequest may revise their plans based on fluctuations in their asset values.  Wealth may be consumed by medical and long-term care costs, or simply by virtue of long life.  In short, Boomer households should not count on an anticipated inheritance and forego the need for increased financial planning and retirement saving.”

The largest amount wealth of those aged 65 and over comes from their home, with 33.1% of the total portfolio coming from “net housing” — meaning after any remaining mortgage balance has been paid off.  Due to the unpredictable nature of asset performance, the report cautions against relying on inheritance as a silver bullet to achieving retirement security.

“Policymakers should be developing policies and programs to boost Americans’ savings and promote longer work lives,” said Alicia H. Munnell, a co-author of the study and director of the Center for Retirement Research at Boston College.  “They should be developing policies and programs to boost Americans’ savings and promote longer work lives.”

To view a copy of the report, see here.

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  • It is interesting that the $5,000,000 federal estate tax exemption which goes into effect on Saturday will make almost all estates exempt from the federal estate tax. As expected Congress retroactively reinstated the estate tax to 1/1/2010 but with a right for the estate to elect the system which have otherwise been in place.

    No doubt the Steinbrenner estate will make the election. Per NBC and the NY Times the estate will save a cool $0.5 Billion. Not a bad day’s work. That is good news for the NY Yankees.

  • Don’t worry about the Baby Boomers. If they don’t have enough money for retirement, they will simply get the democrats and republicans to steal it from Generations X,Y,Z … who will never get a penny of Social Security or Medicare, though they will have to pay for it.

    • Mary,

      Sorry Mary but they will have to pay for my father’s, mine and some of my son’s as well as we did for our grandfather’s and most of my father’s. The problem is our social engineers (the religion of my generation) who are surprised with the result wanted us to go to negative population increase. We did. Now they wonder how will everything be paid for.

      So how will it be paid for?

  • This data may be new to some, but apparently was known by the greedy politicians pining for increases in double taxation…ahem..I mean estate taxes. Even after the exemption amounts, if they could get their mits on it…this would be a nice payday for bearucrats to fund their incessant spending. What is better than over taxation? Taxing the same money twice, that’s what!

    • James,

      Last I checked, Senators Rockefeller and Kohl are not standing in line for food stamps. They are just the ones with more famous names in Congress who voted this into law.

      If you check your facts you will find that some even pay triple taxation through dividends. Ah, to be in their shoes.

    • James,

      It is time to put some things into historical perspective. During the Vietnam War the highest income tax rate on non-earned income was 70%. Then on top of that we had an estate tax at that time with a maximum rate of 77%.

      Some may say that if one adds the 35% income tax rate to the 35% estate tax rate the heirs of rich people will only keep 30% of the taxable income of the decedent. That math is totally illogical and faulty. Using the highest income tax rate, taxpayers keep 65% of what they make before consideration of state and local taxes. If they live in states like Texas and Florida and keep the 65%, it is now the 65% which is subject to the 35% estate rate. That is an additional tax of 22.75%. That means that the highest income/asset taxpayers in the country can keep 42.25% of what they make which is subject to both income and estate taxes.

      Philosophically, many in the country do not agree with the estate tax. They object to a redistribution of wealth due to death. I am sure that those who are subject to it would be glad to see that tax being paid by all those who are subject to the income tax even though they would share in a part of that cost.

      Now for a quick look at just top U.S. income tax rates over the last 70 years. FDR took it to 94%. Even Ike had it at 92%. JFK brought it down to 77% and LBJ to 70%. President Nixon took it back up to 77% and brought it back to 70%. President Reagan got it down to 50% and eventually 28%. Today we are at 35%.

      The total income plus estate tax impact today is less than 8% higher than the maximum income tax rate under most of the administration of President Reagan. From a historical perspective, the wealthy in this nation are not overpaying their fair share. Remember during the Reagan era, the maximum estate tax rate ranged from a high of 70% to a low of 55%. Even at its lowest, the total impact of federal income and estate taxes at their maximum rates today is only 2.75% higher than the maximum federal estate tax alone at its lowest point in the Reagan Administration.

      Do the wealthy really have that much to complain about?

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