Saturday, June 16, 2012

You know that inheritance you think you're getting? (Infographic)


Not so fast!

Let's use a poker game for high rollers in Las Vegas as an analogy for what I mean by "not so fast".

You're playing in a high stakes game and have what you believe to be the hand of a lifetime.

When the betting is done you fan your four Kings out on the table, reach for your drink and start to shovel the pot to your place at the table.

All of a sudden the player across the table grabs your arm and says "Not so fast! Read'em and weep" as they lay their four Aces down on the table and take the chips right out of your hands!

Along those same lines, for those of you who may have been thinking about an inheritance you were going to be receiving from your parents, not so fast!

For some those anecdotal chips may need to stay on the table for their parents to use for day-to-day living and other unexpected expenses. Ultimately, at the end of the game, they will be out of their chips.

For others, not only will their parents be out of chips before the game is over due to higher than anticipated expenses coupled with reduced income (as the partial result of the return on many fixed income investments being close to 0%), but those children will have to actually support parents by giving them some of their own chips.

The bottom line?

Without using a Vegas analogy the bottom line is this. That for many this is becoming the new reality that may catch children by surprise. Not only is it becoming more likely that there will be no inheritance but that they may be called upon to support their parents.

"...But for a growing number of boomers, things aren't going according to plan. The postwar generation is living longer—and many are spending their savings along the way. And, of course, many of them also took a hit in 2008.

The result is that, as a group, boomers likely won't be getting as much of an inheritance as they hoped. Even worse, far from receiving a bequest, a growing number are tapping some of their own savings to help their cash-strapped parents make ends meet.

For families, the result is often a lot of scrambling, dashed dreams, and conflict and angst as parents and children try to come to grips with the lean new reality—and divide up a smaller pie.

"There are way too many adult children I see who are looking at Mom and Dad's estate as their ticket to a secure retirement," says M. Holly Isdale, an estate planner in Bryn Mawr, Pa. "But with people living longer, much of the money is likely to be spent..."

Read the full article at WSJ here.


Chart source WSJ

Picture source


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