To Live or Not to Live Off an Inheritance?


Hoping to live off an inheritance once you retire?  The Future of Retirement, a global study from HSBC, indicates that many working-age people in the both the U.S. and worldwide are hoping to supplement their retirement income from an inheritance.  It’s not a bad strategy, but begs the question how long can you live on the amount you may receive?  Will it be enough?

In the HSBC study, it found that almost three of four people or 72% of those expecting an inheritance claim they plan to use an inheritance to help finance their retirement.  What was even more interesting was 10% think it will fund their retirement.

The report went on to state that In the US, more than three in four or 76% expect it will finance either all (10%) or part (66%) of their retirement.  However, the probability of getting an inheritance, which varies by country, is not a certainty.

The interesting fact from the study is that in developing countries, residents have a greater probability of getting an inheritance than people in the United States and most other developed countries.  Rretirees in India (86%), Mexico (84%), Malaysia (78%) and Brazil (71%) expect to leave their family members an inheritance.  By contrast in the US just over half  or 56% plan to do so.

Inheritance amounts are more modest in developing countries and vary from an average of $39,000 in Malaysia to $132,000 in Brazil. In the US, anticipated inheritances average $177,000.  By contrast, in Australia, 69% of retirees anticipate to leave $502,000 to their heirs.

The Worldwide average of what nearly seven in 10 retirees or 69% expect to leave behind about $148,000 to family members, the study reported.

While most US Citizens believe they will leave an inheritance, there are variables that can stop this from happening. As the US population grows older, our elder often encounter unplanned life events that draw down the expected inheritance they want to leave.  Often, funding other things such as medical and nursing care in later life, combined with increased life expectancy, means they may even outlive their income.

It brings us back to the question, how much can you realistically expect to  receive? What happends if you get little or nothing?

Now is the time to assess your financial situation for your retirement planning to insure you have sufficient income for a retirement that may last more than 25 years.   Life insurance, for your parents and yourselves can go a long way to help protect your inheritance and the inheritance you leave behind for yours.  And, it’s never been easier to buy and afford.

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