10 Retirement Pitfalls, Pitfall #5: Counting on an Inheritance

Yahoo has a list of 10 retirement pitfalls and I'm going to list and comment on them all. Here's today's pitfall:

Counting on an inheritance: Counting on an inheritance or some other type of cash windfall for your retirement is playing with fire. While your parents may have a good retirement fund for themselves, there are so many things that can happen to quickly drain that fund. This is especially true if they get sick and have a lot of medical bills or if they need to go into long-term care. You should always remember that their money is theirs and not yours, and they are free to spend it any way that they like. If you do receive an inheritance, it should be looked at as an added bonus. But you should not count on it for your retirement fund.

I believe that in most cases aging parents will be a financial drain on families (as they need extra money for long-term care, medical bills and the like) versus leaving them a windfall. I'm certainly planning on receiving nothing and if need be, I'll certainly make my finances available to provide good care for my parents in their old age.

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Comments

[plonkee]

I'm not counting on any wealth being passed on from either of my parents. And even if there were any left over it would have to be split several ways.

On the other hand, I don't know about supporting them financially if they run out of money. I don't like the sound of it, I suppose if push came to shove I'd have to fork out. But I'd probably lecture them on fiscal responsibility given half the chance ;)

Still, I'd rather they were costing me money than dead.

[broknowrchlatr]

That is a great point for people to remember.

My parents have about $1MM right now. They will be retiring within a couple years. They will be able to do ok spending just $30k a year. But, if the market turns down and they have large healthcare expenses, this could drop to 0 in a heartbeat. I'm helping to manage it so it just ends up being positive.

[Sarah]

No one is "fiscally responsible" enough to provide against the costs of a health catastrophe in old age on an ordinary middle-class income in the U.S., and these costs are only rising. I'm a little boggled that there's anyone out there who hasn't grasped that.