Inheritances are something of a difficult topic to discuss. No one enjoys thinking about the death of their loved ones.
But you have to when it comes to inheritances. Upon a loved one’s death, their wealth is transferred, sometimes directed by a will, to those who are still living.
Receiving a financial inheritance can be a huge blessing to the recipient. But increased life expectancy can change when recipients receive inheritances and what they do with the money.
How will Millennials’ inheritances be different from prior generations? Let’s consider five reasons.
- They will receive an inheritance at an older age. Millennials should not expect to receive an inheritance in their early or even middle age years. Because we are living longer, there are many Baby Boomers out there who yet to receive an inheritance because they still have living parents. More than likely, this trend will continue. So Millennials can forget about receiving an inheritance that will repair their early financial mistakes. Many Millennials will be at retirement age before they get an inheritance.
- Inheritances will be used for different purposes. Because Millennials will probably receive their inheritances later in life, the funds may be used differently than prior generations. We may see Millennials use these resources to cover their health needs later in life or some may just plan on passing them on to their children and grandchildren.
- Much will have already been used by their parents for retirement. Increased life expectancy comes with increased costs. Retirees will need to use the money they have saved longer than prior generations. Because of this, it is possible that less will be left to pass down.
- Inheritances cannot be counted on as “game-changers.” Millennials cannot rely on inheriting a financial bailout. It is likely that, by the time they receive an inheritance, the ramifications of their money decisions, both good and bad, will have already been felt.
- There may be no inheritance at all. According to a recent report, 68% of Millennials expect to receive an inheritance. Unfortunately, only about 40% actually will. For those Millennials who think that an inheritance will be a significant source of money for their retirement (62%), they may be in for an unpleasant surprise.
Regarding inheritances, the best thing a Millennial can do is to manage their resources in a way that assumes no inheritance. Live out biblical financial health–Give generously, save wisely, and live appropriately.
This way, whether you receive a large inheritance, small inheritance, or no inheritance, you will experience less financial stress and greater financial health.