Canadians have been told by pension experts that we are not saving enough for our retirement. Since we’re all living longer, we’ll also need more money than our parents did by the time we’re ready to quit our jobs. But one silver lining that people often overlook is that we’ll also be getting more inheritance than in any previous generation.
The average net worth for people usually peak when they’re around the age between 50 and 65. This group of people today are known as the baby boomers 🙂 It is estimated that boomers in the United States will receive $8.4 trillion in inheritances according to the Center for Retirement Research at Boston College. That’s an average of $300,000 per inheriting household. That could mean the difference between retiring at 55 or 65. In last week’s post I mentioned that Canadians have a higher net worth than Americans, so good for us 🙂 Plus Canada doesn’t have any estate tax so that’s even better. Most Canadians (68%) own our own homes, and the average price of a home is $386,000. Even if boomers don’t receive any cash from their parents there’s a good chance they’ll inherit some real estate.
Not everyone is lucky enough to receive an inheritance, but more often than not people do so it should be worked into a financial plan. It might be uncomfortable speaking about inheritance with an elderly parent but estate planning is important for the whole family. More people today will receive an inheritance than a company pension, yet lots of people don’t address inheritance as part of their retirement planning. There has never been a better time to be a baby boomer 🙂 The kids have moved out of the house. The government sends you cheques if you qualify for OAS or CPP/SSI. You have more free time than you know what to do with. And most likely there will be some windfall coming your way 🙂 Almost makes me wish I was a boomer. Okay, maybe not 😛
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Random Useless Fact: It takes 2400 liters of water to produce 1 hamburger from scratch
I wish my parents were receiving some sort of inheritance! Instead, they’re asking me for money! :p
That sucks. I think that’s called reverse inheritance, where the parents spend their children’s future money. Not very responsible of them.
I know someone who is a boomer that just received money from her parents one of whom passed away many years ago and another who has been in a home for many years and is nearing 100 years old. She turned around and put the money into a TFSA since she had not contributed to it.
Wow, I don’t know of many centenarians but that’s great. I would top up my TSFA too if I had some extra money right now 🙂
I’ve never asked about inheritance, and I don’t want to know.
But mathematically you are correct. There will be huge windfalls to Gen X and maybe Gen Y.
I’ve never asked either, but I have some idea of my parent’s assets. In a future post I plan to discuss how to properly distribute an inheritance to pay the minimum amount of taxes on it 🙂
I had no idea Canadians has more in retirement than people in the US. Damn we better get going!
Part of the reason is because Canadian’s don’t get hit with any estate tax when they receive any inheritance :0)
First off I love all of the meme’s, pretty funny additions to the post. At first I thought this was going to be a post about boomers and their possible burden on the system in the future, but it was a more positive spin on things. I don’t believe I will be getting an inheritance but I won’t be inheriting debt either, makes my retirement planning simpler.
Thanks for dropping by. One of the things I really like about inheritances is they can only benefit the next generation for the most part. Any positive net worth gets transferred to down through the family or a beneficiary, which could be anyone, and will bypass the estate, but any negative net worth won’t become anyone else’s responsibility. If someone doesn’t have any financial assets, but has a larger mortgage than what their house is worth and if they have a $10,000 balance on their bank issued Visa credit card, and passes away then sucks to be the bank because they have to take all the loss 🙂 Unless someone else co-signed that credit card.
Why doesn’t it surprise me that Canada does not have an estate tax? 🙂 I wish we could learn a few things from our neighbors.
I wish for the same thing, but for Canada to learn more from the US, like lower income taxes 😀
I am definitely not expecting any inheritances, and are definitely in the ‘reverse’ inheritance position, especially with “somone’s” parents. 😛 All I know that credit card liability does not follow the kids. 😛
Maybe I just need to find someone with the average $300K inheritance and become good friends!:P jokes!
Another interesting article, as always!
Yeah good thing most debts go away at the end of someone’s life. I suppose if someone knew they didn’t have long to live they could really rack up their credit card balance.
I am a baby boomer and my dishonest brother and my father’s lawyer have stolen over $300,000 from my family’s trust.
I feel this is going to be the biggest epidemic that Boomer’s are facing. I read a great book “Trust Me: every Baby Boomer’s Nightmare”. I wish I had read this book before my parents had died. It really gives baby boomers ideas on how to protect their family trust, and what to watch out for. I highly suggest buying this book if your family has a trust.
Wow your parents were really successful. Sorry to hear about the stolen money from the trust. I haven’t read that book yet but it’s good to learn as much as possible about potential problems whenever a large of inheritance is expected.