Succession & Assets Planning- Where Are The Inheritances Going?

Clients banking on a nice inheritance from their parents need a Plan B. Retirees today are far more focused on maintaining their living expenses than they are leaving a financial legacy behind. Anyone who does has assets to spare is more inclined to give charitable contributions or name grandchildren as beneficiaries to their estate during the estate planning process with their wealth management advisors.
There are some factors that are influencing this trend. For starters, people in America are living longer…which means they incur greater expenses than prior generations, especially concerning health care.
Current projections estimate that the average retired couple will see 67% of their Social Security going to medical care costs. Couples retiring ten years from now face 90% of their SSI benefits going to medical. This is all occurring at a time where company pension plans and retirement savings plans are disappearing—making high net worth clients, even more, cognizant and cautious regarding spiraling health care costs. The risk of retirees outliving their money is even greater still due to the vast amount that have under-saved.
52% of US households are currently at risk of not having enough to maintain their standards of living in retirement. The growing emphasis on saving took root during the last economic crisis—Americans saw their portfolio plunge and housing values snuff out. This last recession was particularly hard on retirees—those who no longer bring in income and were forced to liquidate assets in the middle of a down market.
With safety nets like defined benefits plans no longer in place, the concerns surrounding future Social Security Benefits, and health care costs rising to astronomical levels, there is a real concern about downsizing lifestyles during retirement. This has caused a shift in estate planning strategies, and clients need to be prepared on both sides of the coin for these instances.