New AARP Study Shows Few -- And Small -- Inheritances for Boomers

For a generation which was doted on by its parents, it appears that Boomers may have to learn to live with disappointment when it comes to inheritances.

A new AARP study of inheritances shows that about five in six (82.7 percent) Boomers reported that they had not received an inheritance by 2001. And, also as of 2001, about five in six (85.1 percent) Boomers said that they did not expect to receive an inheritance in the future.

“This is not the goose that laid the golden egg,” said AARP Associate Executive Director Christine Donohoo in announcing the results of the study. “Inheritances are non-starters for all but the lucky few.”

“These stunning findings point up once again the central role that Social Security — guaranteed, lifelong and inflation-protected — will continue to play in the lives of most older Americans,” Donohoo added.

Further indicating that retirement security could be something of a bust for Boomers who are banking on an inheritance as their financial linchpin, the AARP report said that among those who did receive an inheritance as of 2001, the median value was only $47,909.

The AARP findings are broken down for three age groups: pre-Boomers, Boomers, and post-Boomers. While the median inheritance for Boomers by 2001 was $47,909 (in 2002 dollars), the median for pre-Boomers was $108,885 and for post-Boomers, $22,167.

That older families received larger total inheritances than younger cohorts reflects the fact that they, but more particularly, their parents, are older, and more likely to have accumulated more assets to leave to their families, the study concludes.

Over the last decade, a number of reports have projected that Boomers would receive trillions in inheritances over the next several decades, with individual estimates as high as several hundred thousand dollars.

The study, conducted by AARP’s Public Policy Institute, analyzes data from the Federal Reserve Board’s Survey of Consumer Finances (SCF) conducted every three years from 1989 through 2001. The survey provides detailed, self-reported information on the finances of American households.

The AARP report — titled “Pennies from Heaven: Will Inheritances Bail Out the Boomers?” — focuses on Boomers as part of an analysis of bequests to all age groups.

Some of the other highlights include:

Inheritance size for all groups is positively correlated with net worth: families with net worth of $140,283 or more received almost two-thirds of all inheritances.

In addition, one quarter of all reported inheritances larger than $100,000 were received by people in the top 20 percent in terms of wealth. “The rich do appear to get richer,” the report said.

While in 2001, just under 15 percent of Boomers expected to receive an inheritance in the future, only 5.8 percent of pre-Boomers expected to receive any inheritances in the future. (AARP said this most likely reflected the fact that pre-Boomers are the least likely of the three groups to have living parents.) In contrast, 18.4 percent of post-Boomers said they were likely to receive an inheritance.

“In general, inheritances will not make a significant splash in the retirement savings of most Boomers,” AARP concluded.

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