Should You Ever Count On An Inheritance?

Let me tell you something I’ve never admitted before to anyone, including my husband (whom I tell everything to), my sister (who’s probably thinking the same thing I am), and my two-year-old daughter (whom I often tell secrets because she is the world’s best secret keeper, simply because she can’t talk much yet)…

I expect to get some money after my parents die.

There. I said it. (Rather, I wrote it – I can’t bring myself to say it).

I feel awful admitting this. (It’s not like I want them to die, of course!) I feel snobby for admitting this. (What a First World problem to have!) I’m also scared to admit it-as if some higher power will read what I wrote and strike my parents down sooner than they would have otherwise.

But let’s be honest – have you ever thought about getting an inheritance after your parents die? Are you, somewhere in the back of your mind, secretly counting on it? Is it OK to?

Just because your parents want to leave you money doesn’t mean they’ll be able to

Part of the American Dream, especially our parents’ version of it, is leaving something to your children upon death.

In 2013, HSBC found that American retirees expected to leave an average inheritance of almost $177,000 to their heirs, the sixth highest of any country in the world.

But just because your parents have intentions of leaving you an inheritance doesn’t mean they’ll be able to pull it off.

People are living longer than ever these days. The CDC reports that the average age of death in America is 78.8 years old. In 2000, it was only 76.64 years old.

But living longer doesn’t mean you’re living well. The longer people live, the more they need to spend on health care and living costs. Translation? The longer you live, the less money you have to leave to loved ones.

Although your parents are old and wise, they can’t predict the day of their death any better than you can. They have no idea how much money they’ll need to take care of themselves. The Centers for Medicare and Medicaid report that personal health care spending for people 65 and older was $18,424 in 2010 – that’s three times as much as a working-age person spends.

With any luck, whatever your parents have invested and saved will cover the cost of getting old. But just because your parents are old and wise doesn’t mean they can predict the economy. When the market crashed in 2008, those in their 50s and 60s were hit hard.

The AARP found that “the recession’s effects on older Americans were particularly severe for salary earners in their 50s and early 60s who were counting on more than a few years of additional earnings and lost their jobs.” In addition, “the impact of job loss on a household’s balance sheet [was] compounded if the loss of a job entailed the loss of health insurance, and further aggravated by the effect of the stock market crash on holdings in a 401(k) plan or IRA.”

I usually walk on the sunny side of the street, but your parents can’t guarantee another recession won’t happen again.

Stop wondering about an inheritance – ask your parents about it

Let’s say you’re confident your parents have saved enough to take care of themselves.

Or maybe your parents, like nearly one third of Americans, have paid off their mortgage, so you’re expecting a windfall once they pass away and their house is sold.

Then is it ok to stop contributing to your own retirement savings to pay off credit card debt, student loans, or buy a house?

Probably not-especially if you’re not willing to talk regularly to your parents and siblings about what will happen when your parents pass away.

“Communicate, communicate, communicate before, during, and after death,” says Fran Solomon, founder and president of non-profit, web-based grief platform, HealGrief.org. “Communicating takes the mystique away about death, which is inevitable. And it also takes away the mystique [about] who gets what and what goes where.”

The best advice? Just don’t count on it.

Since no one can predict the future, no one can tell you for sure how much your parents will be able to leave you. The best way forward is to pretend that money doesn’t exist and maintain your finances as best you can on your own. This means:

  • Save for retirement
  • Plan to work until 65 (if you end up retiring early, that can be a nice surprise, but don’t count on it)
  • Build an emergency fund
  • Plan to pay off all your debt yourself

If a parent (or a great aunt in Wichita) passes away and leaves you some money, great. If they don’t, you’ll be OK on your own.