As Baby Boomers continue to age, their Gen X children and millennial grandchildren may expect to receive an inheritance. Counting on such an inheritance is not wise financial planning. More than half of those who expect to inherit do not. The reasons behind those statistics include increased longevity among today’s seniors, expensive long-term care costs and the rising cost of living in most parts of Maryland.
In a recent report by The Lifetime Medical Spending of Retirees, economists predict that seniors will incur an average of $122,000 in healthcare costs between age 70 and date of death. Most of these expenses will be paid out-of-pocket, reducing the assets that will be passed down to the next generation. Lower income individuals may depend more heavily on Medicaid to shoulder these expenses.
Many seniors are also looking to reverse mortgages to help pay for the rising cost of living. This in turn depletes the equity in the home, which is often the largest asset of the estate. For all these reasons, much less will pass by way of inheritance than many think (and hope) will occur. It is not wise to assume an inheritance can bail out any present day spending.
A responsible financial plan should be developed around the assumption that no assets will be inherited and current income can meet living costs including healthcare, saving for retirement and saving for emergencies. Inheritance, if received, can then be brought into the financial plan and goals reassessed. For more information on estate planning in the Greater Baltimore area, please contact Stouffer Legal at 443-470-3599.
