The Baby Boomers as a whole are rich and many of them will leave significant wealth to the succeeding generations. However, the windfall does not last for long as one in three people will have spent the entire devise within two years. This trend is unfortunate as the majority of current workers have little in the way of retirement savings and a generous inheritance could be used to provide for the future. Instead of blowing through money, individuals who inherit should be advised to have a cool off period to allow emotions to settle before making any financial decisions. This will allow an individual or family the chance to decide the best way to use the money such as paying off high interest debt or putting the money into savings. Spending some of the inheritance on personal comfort is not a problem but should be limited to part of the inheritance with the remainder being dedicated to less ephemeral use. While debt reduction or saving does not feel as exciting as a world trip or luxury car it will ultimately be the better choice.
See Elizabeth O’Brian, One in three Americans who get an inheritance blow it, Market Watch, September 3, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
