Your Inheritance May be Larger than You Expect
NEW YORK (MainStreet) -- You might not be expecting to receive an inheritance, but you may be in for a surprise. While only 27% of adults under 60 believe they will inherit something, nearly two-thirds (64%) of adults over 60 expect to leave an inheritance. And they plan on leaving more than recipients expect, according to a new Interest.com survey.
The poll says the median projected inheritance is likely to be between $50,000 and $100,000. Some 25% of respondents expect to receive between $10,000 and $50,000, while 22% think a $100,000 to $500,000 windfall is probable. Another 17% reported they are likely to gain $50,000 to $100,000.
The Bureau of Labor Statistics says inheritances historically account for between 20% and 50% of total household wealth accumulation in the U.S. and are an important source of both business and home ownership.
What will most people do with their inheritance? Jay Zagorsky, a research scientist at Ohio State University, conducted a study on wealth transfer and found that adults receiving an inheritance save only about half of what they receive, while spending, donating or losing the rest. But Interest.com poll replies were more prudent. Fully 42% said they would put the money aside for retirement, while another 18% expect to pay down debt.
Just 3% said they wanted to "buy something special like jewelry or a luxury car," with another 3% planning to spend it on a vacation.
"Even a relatively small inheritance can make up for many years of living beyond your means or saving too little," says Mike Sante, managing editor of Interest.com. "It could be the ultimate financial 'get out of jail free' card for many families."
The survey also confirms what earlier studies have concluded: when it comes to inheriting money, the rich generally get richer. Fully a third of those who expect to receive an inheritance worth $500,000 or more are already earning at least $75,000 annually.
"There's not as much social mobility in this country as we would like to think there is," says Anthony Webb, a senior research economist with the Center for Retirement Research at Boston College. "We like to think that it's a dynamic land of opportunity. The reality is a little bit different. Most inheritances go to households that are relatively well off."