One hundred years ago, the life expectancy for men was 50.3 and for women 55, according to Berkeley.edu. Today, it is 73.8 and 79.6, respectively—and the baby boomer generation (people born between 1946 and 1964) is expected to live longer than any generation before it. Not only are Americans living longer, but we are also spending more money and preparing less for retirement with each passing generation.
Your parents are spending your inheritance.
Your parents are SKI-ing (spending the kids’ inheritance). What’s more, they’re spending half the money they inherited from their thrifty parents. WSJ.com found that 50 percent of money inherited by baby boomers goes into savings and the other half is spent or lost. This trend is akin to this quote, found on the J.G. Wentworth Twitter feed:
Finance is the fine art of passing money from hand to hand until it disappears altogether. #ItsYourMoney
— J.G. Wentworth (@jgwentworth) October 25, 2013
What are they buying? According to the National Center for Policy Analysis:
TD Ameritrade recently released data that sheds a bright light on baby boomers and money.
Whether or not Social Security and Medicare are around when you reach your 60s, these programs will likely remain in effect as boomers and Generation X approach retirement ages. Unless your benefactors have supplemental insurance, expect big chunks of your inheritance to go toward:
Hopefully, your parents have set up life insurance policies to pass their otherwise-spent-down legacy to you. Bottom line, though: Do not assume your parents’ legacy will take care of you as you age. A lot can happen between now and the time they pass, and if you haven’t already set up a retirement account of your own, meet with a financial planner to talk about your options. Talk to your bank for recommendations or visit the Wall Street Journal for a guide to finding a good adviser.