Why You Shouldn’t Count on a Big Inheritance to Bail out Your Retirement Savings – Presented by Mark K. Lund, Financial Advisor in Utah

Financial Advisor Utah

One of the staples of classic novels is the unexpected inheritance. If Charles Dickens or Jane Austen or Louisa May Alcott needed a happy ending, they would have their protagonist come into an unanticipated fortune.1

Not surprisingly, it’s a popular idea outside of fiction. And for several decades the media has been telling us that a historically unprecedented transfer of generational wealth is going to happen very soon. For example, The New York Times ran stories on the coming inheritance wealth boom five times between 1999 and 2023.2

And based on commonly-presented statistics alone, it appears that many of us should be expecting to receive a huge lump sum any day now. The 55.8 million Americans over 65 (about 17 percent of the population) hold $96.4 trillion (about half the nation’s wealth). As they pass away, it would seem they should be leaving substantial fortunes to their children and grandchildren.

Unfortunately, it doesn’t often happen that way. The U.S. Bureau of Labor Statistics looked at data from 1989 to 2007 to see if they could find evidence of a Great Wealth Transfer. They discovered that over that period, instead of ramping up as expected, the number of families reporting an inheritance actually fell by 2.5 percent.

There are several factors that are making substantial inheritances relatively uncommon.

First of all, wealth is not spread evenly among older people. A large percentage is held by a relatively few ultra-wealthy. Their heirs will probably receive a lot of money.

Secondly, a person’s final years can be quite expensive. Finance writer Ann Logue tells the story of her husband’s aunt, who at age 87 told him that he would inherit her estate when she died. At the time she declared this she had a $250,000 nest egg. But she soon required increasing medical care. And by the time his aunt died, Logue’s husband received around $2000.

“Instead of paying off our mortgage,” writes Logue, “we used the money to replace our dining room windows.”

While receiving a substantial windfall through an inheritance can be a financial positive (who couldn’t use more money?), counting on it to secure your economic future can have a number of negative effects. You can begin to see your older relative only in terms of what they can provide to you when they die. You can experience relationship-damaging conflict with your siblings or other heirs over who gets how much. And there’s a good chance that a sizeable windfall will never materialize.

Instead, it’s best to work with your trusted financial advisor to plan for your retirement based on the income you have control of. And if you do happen to make out like Pip from Great Expectations, they can help you invest that money in a way that’s designed to help prepare you for the future.

If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.

Regards,
Mark Lund
Stonecreek Wealth Advisors, Inc.
11576 S State Street, Bldg. 1002
Draper, UT 84020

Sources:
1. http://go.pardot.com/e/91522/op-10-novels-about-inheritance/94k8fh/2191469456/h/KAk1r3Vi0XhST3VyBaRUkkFs4JEtntISNdmDKneh2Ek
2. http://go.pardot.com/e/91522/itance-estate-planning-2023-10/94k8fl/2191469456/h/KAk1r3Vi0XhST3VyBaRUkkFs4JEtntISNdmDKneh2Ek

Disclosure:This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by Efficient Advisors, LLC (“EA’) for Mark Lund, Mark is a Financial Advisor in Utah. He is known as a Wealth Advisor, The 401k Advisor, Investor Coach, Financial Planner, Investment Advisor and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment management and retirement planning for individuals and 401k consulting for small businesses. Mark’s newsletter is called The Effective Investor Newsletter. Cities served in Utah are: Salt Lake City, Salt Lake County, Utah County, Park City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, American Fork City. The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.

Category: Blog, Newsletters

About the Author ()

Mark K. Lund is the author of The Effective Investor, a #1 Best Seller, and founder of Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisory firm. He has provided articles for or been quoted in: The Wall Street Journal, The Salt Lake Tribune, The Enterprise Newspaper, The Utah Business Connect Magazine, US News & World Report, and Newsmax.com, just to name a few.  Mark publishes two newsletters called, “The Mark Lund Growth Report” and “Mark Lund on Money.”  Mark provides CPE (continuing professional education) courses for CPAs.  You may also have seen him on KUTV Channel 2, or as a guest speaker at a local association or business. Mark provides investment and retirement planning services for individuals and 401(k) consulting for small businesses. In his book, The Effective Investor, Mark exposes the false narrative magazines, media, big Wall Street firms, and most advisors want you to believe. The good news is that Mark will show you that you don’t need their speculative ways of investing in order to be a successful investor. Get a free copy when you schedule your initial consultation.

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