The Kids Think You're Spending Their Inheritance. Are They Wrong?

Getty Images You've all seen the bumper stickers -- maybe you even have one on your car -- "We're spending our kids' inheritance." But funny as the sticker is, and as much as you might share the sentiment on occasion, the truth is that most Americans of retirement age say they aren't doing anything of the sort. That's the upshot of a new survey from Bankrate.com (RATE) subsidiary Interest.com, which recently polled Americans ages 18 to 59, asking whether they expect to receive an inheritance from their elders at some point in their lifetimes. And then they polled the folks bearing the bumper stickers... and came to a pretty startling conclusion: Barely 1 in 4 Americans under the age of 60 have any hope of ever inheriting anything from anybody. But nearly 2 out of 3 Americans age 60 and over say that yes, indeed, they have been saving, and one of these days, their heirs are going to benefit. What We Have Here Is a Failure to Communicate A 2011 study conducted by the Boston College Center for Retirement Research estimated that U.S. retirees have built up an astounding $8.4 trillion dollars worth of inheritable wealth. Baby Boomers have benefited from giveaways to the tune of $2.4 trillion already, but this still leaves $6 trillion more waiting to be handed out. So on one hand, according to Interest.com, 64 percent of the folks with the dough say they expect to have enough money left over at the end of their lives to bequeath it to their heirs. Yet on the other hand, 27 percent of Americans who might inherit that money don't think they'll ever see any of it. Why not? The bumper stickers may be one reason. When enough people start joking about planning to spend what they've got on themselves -- especially in an economy like this one, when that may be their only option -- you can hardly blame the kids for beginning to believe them. Or perhaps the kids may not be expecting to receive an inheritance because they simply don't know there's any money to inherit. Interest.com notes that "older parents may ... be reluctant to share their financial situation with children, not wanting to raise expectations." The Best Intentions But a third possibility also bears consideration: Maybe the kids are right. According to the Centers for Disease Control, life expectancy in the U.S. has increased by 30 years over the past century -- lengthening the amount of time a retiree's nest egg must last to permit any inheritance to take place. The Social Security Administration estimates that a man who's 60 today will, on average, live to see his 81st birthday. A woman will likely live past 84. A lot can happen over 20 years. It may well be that, as a whole, retirees have "$6 trillion" saved up. And maybe they really do to hand this money down to their heirs. Still, you have to figure that, just as in society at large, an awful lot of this money is concentrated in the hands of relatively few individuals -- "the retiree 1 percent," you might call them. Meanwhile, as mentioned here on DailyFinance before, 60 percent of American workers ages 55 and older have saved less than $100,000 for retirement. Even with the help of Social Security and pensions, it's not going to be easy to stretch $100,000 over a 20-year retirement. Even if the remaining 40 percent of the population is a bit better off, it may prove simply, fiscally impossible for 60 percent of the population to make any significant bequests. And as for the 64 percent who nonetheless insist that they plan to pass some wealth down to their heirs? A lot of them may be overly optimistic about their assets, or overly pessimistic about how long they'll live. Either way, it may end up being the thought that counts.