Those people banking on an inheritance to fund their retirement best think again, says a CBS News report published this week. Taking a look at the wealth of the older population and a recent Allianz Life report, CBS says it’s more likely people planning on receiving an actual inheritance will find themselves ending up with ” a bunch of family stories, with some furniture, used cars, or jewelry thrown in for good measure — certainly nothing you can take to the bank.”
CBS News reports:
According to the Allianz report, 86 percent of boomers (those age 47 to 66) and 74 percent of elders (those age 72 and over) state that family stories are the most important aspect of their legacy, ahead of personal possessions (64 percent for boomers, 58 percent for elders). Financial assets, which you can take to the bank, are cited as most important by only 9 percent of boomers and 14 percent of elders. In addition, only 14 percent of elders feel they owe their children an inheritance, down from 22 percent who reported they felt this way in 2005.
These results make a lot of sense, given the modest retirement savings of most boomers and retirees. They’ll need to use all their savings to avoid another unfortunate legacy — the need to move in with their children because they’ve run out of money.
This leads us to the numbers I referred to earlier. According to the 2012 Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI), less than one-fourth — only 22 percent — of households headed by someone aged 55 and over have retirement savings of $250,000 or more. We can use numbers from my April 2012 retirement income scorecards to see just how much retirement income $250,000 in retirement savings will generate for a couple both age 65, using various methods of producing a retirement paycheck.
…One legacy item not specifically mentioned in the Allianz report is home equity. A good use for home equity is to keep it in reserve in case you need to tap it for long-term care expenses late in life. At that time, you’d either take out a home equity loan or a reverse mortgage. With this strategy, you wouldn’t tap your home equity to generate retirement income while you’re still healthy. And if you don’t need long-term care, then the house can eventually pass to your heirs.
Read the original article at CBS News.
Written by Elizabeth Ecker