“The finest inheritance you can give to a child is to allow it to make its own way, completely on its own feet.” — Isadora Duncan

WillOddly, the topic of inheritance has come up in my conversations lately. One friend emailed this about her wish to buy a house. She said, “I will inherit my mother’s house one day but as you can imagine, I’m in no hurry for that day to come! I want to start building something myself.”

It’s admirable when people recognize the need to be self-sufficient, but lately this seems to be a rarity. I’m surprised at how many trailing Boomers or those of Generation X consider the prospect of an inheritance as a significant part of their financial plan.

I have a friend in his early thirties with a fledgling career as an actor. Although he’s been on some prime time shows in minor roles, he still has to supplement his income by tending bar and working service jobs. When asked if he ever frets about earning a good living as an actor, he told me that he wasn’t worried long term because he would inherit money from his parents.

When he candidly discussed the amount (about $400,000 plus an out-of-state house), I was surprised that he thought less than a million dollars was all he needed to fund his retirement. He’s not the only one. I know people who are in debt or have enormous student loans and they are counting on an inheritance to bail them out some day. Others speak about having money for a down payment on a house when their mother or father passes on.

Am I the only person not receiving an inheritance? I’ve never ever thought about receiving money this way, but I’m starting to wonder if I’m the anomaly. Instead, I often think that along with my siblings, we should be setting money aside to help fund possible long term care for my parents one day.

When my grandmother died, I didn’t receive any money… I was in my mid-twenties and the last of the grandchildren to be setting up a place of my own. My family let me pack up her kitchen and a few small furniture items, but there certainly wasn’t any cash as part of the give-a-way.

When my maternal grandfather passed several years later, my mom generously mailed me a check for $2000 with a warm note most likely written on a post-it note. I almost felt guilty accepting it as he was the quirky guy that gave me a $2 bill in 1976. Aside from the $2 bill, I never really connected with him.

My parents obviously didn’t receive any windfalls from their parents. Being in their mid and late sixties makes them a Baby Boomer bookend and all the projections show that true Boomers following them aren’t in a position to inherit money.

Despite the generation you might identify with, should any of us expect this to fund all or any of our retirement? Here are some retirement realities noted from the Senior Citizen’s Guide:

“Unfortunately, the reality is that 80% of baby boomers should not expect to receive an inheritance at all, according to a recent American Association of Retired Persons (AARP) report. Inheritances are most likely not going to bail out insufficient retirement savings or shortages as a result of Social Security and Medicare.”

“In fact, today’s retirees are spending their assets at a much faster rate than their predecessors. Because they are living longer, they will deplete the assets that they would otherwise have bequeathed to their children.”

Andrea Coombes at MarketWatch reported on similar survey findings. She writes, “Inheritances won’t be there to rescue many of those who find themselves sacrificing retirement savings to support family. They’re not going to inherit a lot from their families. The parents need the money for themselves because they’re living longer. The median inheritance was $37,700. About 1% of those surveyed received an inheritance greater than $1 million, and 5% inherited between $250,000 and $1 million.”

What about the other 94 percent? Sandra Block at the USA Today writes that several factors help explain the smaller-than-expected inheritances, including:

Longevity. “Even if you’re in your 50s or 60s, there’s a good chance that at least one of your parents is still around. And as people live longer, they’re consuming what they’ve saved.”

Health care. “If your mother or father requires nursing-home care, your parents’ savings will quickly disappear. The average cost of a year in a nursing home is $60,000 a year, and in many cities, it’s higher.”

Bigger families. “By today’s standards, boomers come from families that were relatively large and that means a smaller piece of the inheritance pie for those children — today’s boomers.”

Now back to the beginning of this post… what about the generation coming up behind the Boomers? Claire from Tired But Happy presents what I consider a healthy view on the topic. She writes, “How do you plan for an inheritance? In my case, the answer is simple. I don’t.”

Here’s why. Click over to read her expanded thoughts on each:

1. I’d rather have our parents live long enough to spend it all.
2. Our parents are unlikely to die any time soon.
3. They may leave it to someone else.
4. Inheritances are seldom completely fair, or favorable to all parties.
5. Inheritances come with emotional baggage.

So here’s her approach: “Take care of myself and my family now. Plan for my own and my family’s future. Enjoy my relationship with my parents and my partner’s parents, and be glad they are reaping the benefits of their years of work.”

I like her view. If any of us gets a windfall, then this gain should be just that: unexpected!