December 15, 2010

Boomers Could Inherit Over $8 Trillion: MetLife

Two-thirds of boomers likely to receive an inheritance at some point

Boomers stand to inherit over $8 trillion, according to a study released Tuesday by the MetLife Mature Market Institute. The Center for Retirement Research authored the study on behalf of MetLife.

Boomers will inherit $8.4 trillion at 2009 levels, according to the report; $2.4 trillion has already been received. The median per person is $64,000. Two-thirds of boomers are expected to receive some inheritance over their lifetimes.

The wealthiest boomers, according to the report, will receive an average $1.5 million. For less affluent boomers, who stand to inherit $27,000, their inheritance will represent a larger percentage of their overall wealth. The report notes that within wealth deciles, "the distribution of receipts is highly unequal." The median for the top decile is $335,000; for the bottom decile, the median is $8,000.

Including the amount boomers may inherit while their parents are still alive the total transfer of assets is $11.6 trillion.

The report warned against depending too heavily on inheritances for retirement income. The amount and timing of inheritances are "highly uncertain," and even if parents want to leave bequests for their boomer children, they may be forced to use those assets for themselves. Furthermore, most boomers can expect to receive an inheritance in late middle life, forcing boomers to "make many of their key financial decisions before they ever receive any inheritance."

"Policymakers should recognize that inheritances are not a silver bullet to achieve retirement security.  They should be developing policies and programs to boost Americans' savings and promote longer work lives," according to the report.

The report is based on data collected before the recession. To attempt to account for the recession's effects, the CRR studied reactions during the economic downturn in the early 2000s; additionally, the authors assumed inheritances would fall in proportion with the decline in asset values since 2008.

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