Let’s talk about the “I’m set for retirement – my parents have money” plan. You know the one: visions of early retirement, and maybe a beach house, all courtesy of a future windfall.
Sure, inheriting a chunk of change could give your retirement a boost. But here’s the thing: inheritances are not as predictable as you might think; the average inheritance in the U.S. is around $46,200 – not exactly enough to ensure lifelong luxury. And even if your family’s nest egg looks plump, there are plenty of ways it could shrink before you ever see a dime:
- Longer life expectancies: Your parents might live (and spend) a lot longer than you think.
- Market downturns: Investments can tank, shrinking the pot.
- Healthcare costs: Medical bills and long-term care can eat into assets.
- Family surprises: Remarriages, new heirs, charitable gifts, or just plain changing their minds.
Why Relying on an Inheritance Can Be Risky
As a financial planner, I’ve seen too many people bank on an inheritance, only to find themselves scrambling when reality doesn’t match the fantasy. Here’s my approach:
My Approach: Running Multiple Inheritance Scenarios
We’ll run the numbers two ways: one with what you think you’ll inherit, and one with nothing coming your way. (Yes, zero. It’s not fun, but it’s smart.) You’ll see exactly how your retirement looks in both scenarios.
- What if you get what you think you’ll inherit?
- What if you get half that?
- What if you get nothing?
- What if the market tanks before you get it?
I want to make sure you have all the information you need before you book that Mediterranean cruise.
Tempering Inflated Expectations
If you tell me, “My parents have $3 million and I have two siblings,” I won’t let you assume you’ll get a million. I usually cut that number in half (or more). So, you might see $400,000 to $500,000 in your plan, not a cool million. Why? Because life happens, and the only thing worse than not getting an inheritance is planning your future around money that never arrives.
We also talk about all the ways an inheritance can vanish: market crashes, unexpected expenses, family drama, you name it. No, I don’t want to be Debbie Downer, but I want you to see the risks, not just the potential reward.
Bottom Line: You’re in the Driver’s Seat
At the end of the day, it’s your decision. I’ll give you all the info, run the numbers, and show you the possible outcomes. But you get to decide how much you want to save, and how much (if any) you want to count on that inheritance. It can be helpful to think of an inheritance as a bonus, not a guarantee. Save as if you’ll get nothing, and if a windfall comes your way? That’s just icing on the retirement cake.
You’ve likely spent your adult years being fiercely independent and working toward your goals. With the right planning – whether it’s inheriting millions or not – you’ll be able retire on your own terms.
CLICK HERE to make an appointment. Let’s run your numbers.
