US: Inheritances Are No Boon For Most Boomers

Despite forecasts of inheritance windfalls for Boomers, a new AARP study shows that, as of 2004, an overwhelming majority (80.8 percent) of those born between 1946 and 1964 had yet to receive an inheritance.

The AARP study also found that only a small percentage of Boomers – 14.9 percent – said they expected to receive an inheritance in the future, suggesting that for most, inheritances will not represent a boon for their retirement security.

Furthermore, for the fortunate Boomers who had received inheritances by 2004, the median amount received was only $49,000 (adjusted to 2005 dollars).

"Many of us dream of an inheritance in the same way we think about winning the lottery," said John Gist, Associate Director of AARP’s Public Policy Institute (PPI). "The harsh reality is that for all but the lucky few, an inheritance is a pipedream."

This sobering report makes it clear that in the absence of such a windfall, Boomers need to look toward Social Security -- combined with savings and, in some cases, pensions – as the true keystones for peace of mind in their retirement years," Gist added.

AARP’s study – titled "In Their Dreams: What Will Boomers Inherit" – is a follow-up to an earlier study, and is based on an examination of the Federal Reserve’s 2004 Survey of Consumer Finances. The Federal Reserve information derives primarily from interviews with more than 4,500 families that are conducted every three years. AARP has broken down the findings under three groupings: Boomers, pre-Boomers (born before 1946) and post-Boomers (born after 1964).

The latest AARP research findings come amidst continuing projections by some of huge dollar transfers through inheritances to Boomers and the other cohorts. Some estimates have been as high as $41 trillion. A projection of $7 trillion for Boomers alone has not been uncommon.

However, AARP has found that the value of inheritances held by Boomers thus far has totaled only $2.l trillion in 2005 dollars.

Some of the other highlights of the report include:

In contrast with the median inheritance of $49,000 for Boomers, pre-Boomers had median inheritances of $70,000 and post-Boomers, $24,000.

Boomer families in the bottom 40 percent of net worth will inherit just under 20 percent of inheritance dollars, while Boomer families in the top 40 percent will receive over 60 percent of all inheritance dollars.

For those nearing retirement, a large inheritance might play a role in the timing of their retirement, but only the most affluent are likely to receive such inheritances. Concluded the study: "In general, inheritances are not likely to rescue most Boomers if they have failed to prepare for retirement on their own."

AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, AARP.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.