Sensible Perspectives

Great Expectations… Dashed

Posted by on June 18, 2012

A recent Wall Street Journal article observes that the financial crisis and increasing longevity have combined to alter baby boomers’ inheritance expectations dramatically. Many parents suffered substantial losses in the 2007-2009 market crash. Many parents are living longer than they expected. Greater demands placed upon smaller parental resources are a recipe for smaller inheritances. To add insult to injury, in some cases parental shortfalls are large enough that the children are called upon to help out: funds flow from children to parents rather than the other way around.

Every family that finds itself in this kind of situation is disappointed. Parents are unable to keep commitments they made at least to themselves, and perhaps to their children. Children who had been counting on an inheritance to pay for education for their children, to buy a nicer home, or to fund their own retirements have to make other plans.

Each family’s situation is different. It is impossible to say just how each one developed. And, it would be extremely unfair to suggest that specific courses of action could have prevented these disappointments. Hindsight is famously 20/20. We have information now that the profiled families didn’t have when they made their financial decisions.

However, today’s parents, planning for their own retirements and for their own children’s inheritances, can take steps to avoid similar disappointment in the future. Each step is very simple:

While life is uncertain, and nothing can guarantee success, incorporating these steps into your retirement planning will certainly improve your chances.