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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.

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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