Is your inheritance shrinking?
Aug 6, 2012, 8:23 a.m.
Baby boomers are in a difficult position as questions regarding their parents financial health are becoming more important. Unfortunately, many of the answers are just as troubling and awkward as the questions. The picture, once pretty, is now cloudy, at best.
There appear to be at least two major reasons for the rash of shrinking inheritances. First, the recent deep recession drained the finances of many families, young and older. Second, people live much longer than in previous generations. Your parents, by necessity, have to place their former concerns to leave a healthy inheritance for you on the back burner. The front burner is occupied by their real concern that they will not have sufficient money for themselves. Can you blame them?
Current data note that the average-65 year old man expects to live to age 78, while average 65-year old women often live to age 85. Boomers' life spans may even exceed these impressive age projections. The Today show and The Wall Street Journal appear to agree that the Baby Boomer inheritance pool has declined by 13 percent and their parents are focused on having enough money to support themselves.
Even life cover insurance values may be threatened if there are termination dates. For example, an insurance policy term that terminates at age 75 may make it impossible for your parents to replace at any price as they age.
As awkward as the question may be, ask your parents about the condition of their finances. Have you thought about this issue? Have you asked the magic question already? Were you satisfied or surprised with the response?
Boomers who have been planning on inherited finances, including life insurance policy term payouts, may need to rethink their own financial plans. In many cases, their parents' estates are shrinking faster than anyone expected.
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