Why Gen X should stop planning around an inheritance that may never arrive
There is a line item in a lot of Gen X retirement plans that nobody writes down.
TL;DR
- Gen X retirement plans often implicitly include an inheritance, but this is an unreliable assumption.
- Inheritances are not evenly distributed, with most wealth pooling at the top.
- The average inheritance amount is significantly lower than often expected.
- Inheritances are received later in life (median age 58), when they can be less beneficial for compounding.
- Long-term care costs, which Medicare does not cover, can consume a large portion of an estate.
- A primary residence, often the largest asset, may be used to fund care, leaving little for heirs.
- Gen X should plan retirement without relying on inheritance and have conversations about care needs.
- Treating an inheritance as a bonus rather than a foundation for retirement is recommended.