Boomers not Counting on Inheritance
More than four fifths (80.8%) of baby boomers, born from 1946 through 1964, have not received an inheritance, and only 14.9% of boomers said they anticipated that they would receive an inheritance, according to the study which used data from the Federal Reserve Board’s 2004 Survey of Consumer Finances (SCF) as well as the past five SCFs to find any changes in expectations of receiving an inheritance.
Between 1989 and 2004, between 16 and 19% of boomers reported that they received at least one inheritance, and the number peaked in 2004 to 19.2%. Boomers’ expectations for receiving an inheritance have decreased over time, the study showed, from 27% in 1989 to 15% in 2004. The expectations for pre-boomers, born before 1946, and post-boomers, born after 1964, also declined during that time.
The median amount of inheritance that boomers received in 2004 was $64,000, adjusted to 2005 dollars and assuming a 3% rate of return on inherited assets. This amount fell in between the median inheritances of pre-boomers, who received $30,000, and post-boomers, who received $105,000. Both numbers are adjusted to the 3% rate of return.
The study found that families with high net worth received larger inheritances, consistent with 2003’s results. Households in the top quintile – with net worth above $450,000 in 2004 – received almost two fifths of the total inheritance amount in amounts more than $100,000. Families with a net worth more than $160,000 received 60% of all inheritance.
Though many households do not expect to receive a substantial inheritance, two researchers who used data from the 1989 SCF estimated that boomers on the whole could receive more than $10 trillion – in 1990 dollars – in inheritance, according to the AARP study. Other researchers have concluded that several generations could receive at least $41 trillion over the next 60 years. However, the $41 trillion before estate tax would be whittled down to a smaller amount, which, experts estimate, could be a net total of about $7 trillion.
Out of the $12 trillion in inheritance that all households held in 2004, boomers had $2.1 trillion, the study reported.
The study’s results are similar to those found in a Guideline news survey. When specifically asked about their current or future inheritance, boomers said they expect only 10% to 11% of their monies for retirement to come from their inheritance. In addition, among the 64% of boomers who responded to the question about the amount of inheritance they anticipated, the median inheritance is about $100,000 (See Boomers Play Down Inheritance Role ).
The AARP study is here .