Economists say a massive $100 trillion is going to be handed down by baby boomers over the next 25 years in what\u2019s known as the \u201cGreat Wealth Transfer.\u201d According to a survey from Choice Mutual, about 66% of Americans expect to inherit money during this time [1].<\/p>\n
The same survey found that about 1 in 10 people feel less pressured to save money now, since they expect to receive money from their parents.<\/p>\n
While it can feel comforting that a windfall is waiting for you down the line, it\u2019s also one of the riskiest money assumptions you can make. What happens if that expected money doesn\u2019t end up coming your way?<\/p>\n
There are a few key reasons why wealth gets drained faster than expected, sometimes leaving little or nothing behind.<\/p>\n
According to MassMutual, one simple reason is that people are living longer [2].<\/p>\n
Longevity means more money spent on health care and end-of-life costs, and for those who are living an active lifestyle, wealth is being spent on enjoying their hobbies.<\/p>\n
Fidelity estimates that a 65-year-old couple retiring today will likely need $172,500 just to cover health care expenses in retirement [3]. That\u2019s a 4% increase over 2024, and according to the company, the number continues to rise. Annual medical spending for the elderly also climbs steeply with age, more than doubling between the ages of 70 and 90, according to the National Institutes of Health (NIH).<\/p>\n
The costs don\u2019t stop at doctors\u2019 visits and prescriptions. Long-term care is one of the biggest wild cards in retirement planning.<\/p>\n
A private nursing home room costs $10,600 per month, according to CareScout [3]. Even a semi-private room averages more than $9,000 monthly. Meanwhile, chronic conditions common in later life, like heart disease, diabetes, cancer, kidney disease, arthritis and Alzheimer\u2019s disease, can be expensive to treat. Alzheimer\u2019s alone costs the U.S. $321 billion annually, estimates UCLA Health, a figure projected to top $1 trillion by 2050 [4].<\/p>\n
All of this means that an inheritance you may be counting on could evaporate covering your parents\u2019 care.<\/p>\n
And there\u2019s another wrinkle: a significant share of Americans don\u2019t even have a will. A recent Caring.com survey suggests that only 24% of U.S. adults have a will [5]. Without having formally documented estate plans, beneficiaries are open to delays, disputes or lower distributions.<\/p>\n
Story Continues <\/p>\n
Read more: Rich, young Americans are ditching stocks \u2014 here are the alternative assets they’re banking on instead<\/a><\/strong><\/p>\n So what\u2019s the solution? You\u2019ll want to build your own personal financial cushion, and treat any inheritance as a bonus \u2014 not a guarantee.<\/p>\n Here\u2019s how to save responsibly, even if you think you\u2019re getting an inheritance.<\/p>\n Build a strong financial foundation on your own, starting with consistent retirement savings in 401(k)s or individual investment accounts (IRAs<\/a>) and, if available, health savings accounts (HSAs). These accounts offer tax advantages that can cushion the blow of future medical bills.<\/p>\n Keep three to six months\u2019 living expenses in liquid savings to cover medical or caregiving surprises without having to tap an inheritance. It can also keep you from having to rely on credit cards or loans if you have a financial surprise.<\/p>\n Look into long-term care insurance: On average, according to the National Council on Aging, premiums for a $165,000 benefit policy are about $950 to $1,900\/year, depending on age and gender, which is much less than paying nursing home fees out of pocket [6]. For those worried about long-term care, looking into insurance policies while you\u2019re still healthy may make more sense than leaving the risk uncovered.<\/p>\n Reduce burdens like high-interest credit or student loans<\/a> so that you can ease the financial pressure as health costs rise.<\/p>\n Financial advisors<\/a> can help you model scenarios, like if your inheritance declines or health care demands increase. They can help put together a balanced, flexible strategy.<\/p>\n Most importantly of all, talk with your family.<\/p>\n If you think that an inheritance is part of your financial future, ask whether there\u2019s an estate plan in place, whether a will or trust exists and how health care costs are being managed. Being transparent now can prevent misunderstandings and financial disappointment later.<\/p>\n An inheritance can be a gift, but it should never be a safety net. With health care costs rising and longevity increasing, the smartest move you can make is to save as though you\u2019ll never see a dime.<\/p>\n Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. Subscribe now.<\/a><\/strong><\/p>\n At Moneywise, we consider it our responsibility to produce accurate and trustworthy content people can rely on to inform their financial decisions. We rely on vetted sources such as government data, financial records and expert interviews and highlight credible third-party reporting when appropriate.<\/p>\n We are committed to transparency and accountability, correcting errors openly and adhering to the best practices of the journalism industry. For more details, see our editorial ethics and guidelines<\/a>.<\/p>\n [1]. Choice Mutual<\/a>. \u201c66% of young Americans expect to benefit from great wealth transfer\u201d<\/p>\n [2]. MassMutual<\/a>. \u201cExpecting an inheritance? Don’t count on it\u201d<\/p>\n [3]. CareScout<\/a>. \u201cMonthly median costs: USA – National (2024)\u201d<\/p>\n [4]. UCLA Health<\/a>. \u201cAbout dementia and Alzheimer’s\u201d<\/p>\n [5]. Caring.com<\/a>. \u201c2025 wills and estate planning study\u201d<\/p>\n