Waiting For An Inheritance? Stop! There's Not Enough To Go Around

An Awesome Day to all of you.

I have been posting more inspirational/motivational posts lately, but ladies and gentlemen, I believe it's important and time for me to share some statistical information with you.  I have found there are a lot of people who have not considered the importance of securing their future.  I've said it before and I say it again.  People don't plan to fail, they fail to plan.  So I believe it's best I share the reality of the subject mentioned above.  So heads up everyone, this post will be a little longer than usual because of it's importance, especially important for younger couples who are looking to establish a family at some point and also for adults who already have a family established. Let's begin.

A recent Bank of Montreal survey found that 34% of respondents are relying on winning the lottery
to fund their retirement. Almost everyone buys a ticket now and then but how many million-dollar winners do you know personally? Is an inheritance dream equally improbable? One often-quoted study in 2006 asserted that the median amount we can expect to inherit is $57,000, not really enough to change anyone’s life right?  Now ladies and gentlemen , that is 2006.

Let's look a 2012 survey: Stats reported by a survey conducted by Investors Group

53% of Canadians expect to receive an inheritance and apparently most except to get a bit of a windfall.  Of those who believed they knew how much they would receive, 57% expected their inheritance to exceed $100,000.   

These expectations are not in line with what people who have already received an inheritance reported getting.  Of those who were willing to reveal the amount they had inherited, only 18% reported receiving over $100,000 while 26% revealed receiving less than $5,000.  It seems that some of the beneficiaries-in-waiting out there might be in for an unpleasant surprise!

Different age groups had different expectations about receiving an inheritance.  While 80% of those aged 18-29 anticipated receiving an inheritance, respondents aged 30-44 were more modest in their expectations with 62% expecting to receive one.  Baby boomers weren’t so optimistic – 48% of Canadians aged 45-64 thought they’d inherit money. 

What people expect to receive is not necessarily in line with what people expect to leave behind.  45% of Canadians aged 60 and over are concerned that their savings will be depleted during their retirement and that they will not have any money to leave behind.  25% are not willing to make any personal sacrifices in order to leave others an inheritance.   Doesn't this worry you yet?  Maybe this will.  

Let's look at a recent Investor Sentiment Index which was based from an online survey of 2,000 Canadians aged 25+ conducted by Research House:

Younger Canadians feel that they are not getting ahead financially and they shouldn't count on an inheritance according to the Manulife Financial's latest Investor Sentiment Index.

The index also showed that despite robust capital markets at pre-financial crisis levels, Canadians' overall investor sentiment remains mired in the recession.

Almost half (46 per cent) of Canadians aged 25-34 say they are worse off financially than they were two years ago while 40 per cent of those aged 35-44 say they are worse off financially.

Despite that, 62 per cent of Canadians aged 25-34, say they're optimistic that they will be in a better financial position two years from now, while 60 per cent of those aged 35-44 say they remain optimistic for the future.

The latest survey results also show that it isn't likely that younger Canadians will receive much help in the form of future inheritance. Nearly half of Canadians (43 per cent) report that they haven't given any thought to how much cash or assets they'll leave to their heirs. As many as 13 per cent say they plan to leave nothing, while more than one in four (29 per cent) say they will leave less than $100,000. Only two per cent of Canadians report that they will leave an inheritance of $1 million or more.

Why? Why is this happening? Well unfortunately, the ongoing global economic malaise means that many older Canadians are worried about being able to provide for themselves in their retirement years, let alone have anything left over to leave their offspring because due to advancements in health care, people are living longer than ever.  According to a 2011 Stats Canada report, seniors accounted for a record high of 14.8 percent of the population – an increase of more than one per cent over the previous five years. Over that same time frame, the number of Canadian centenarians jumped more than 25 per cent, with 5,825 people 100-years or older shuffling around.  Now as we age, we often face health-related costs – medicines and treatments not covered by provincial health plans, the expense of retrofitting homes with ramps, elevators, and other assistance devices, or the cost of moving into an assisted care retirement home – all of which can eat into (and potential eat up) any inheritance funds.  I guess you can imagine what that number is today.  

Ladies and Gents, this is just one of the reasons why educating yourselves and planning for your future starting right now is important.  Procrastinating now, will cost you a lot later.   Having Faith is great, yeah, but Faith not accompanied by Action is dead -- James 2:17.  A wise person will take action now.

I hope I have been able to shed some light to you.  Would love to hear your comments.

Be Blessed All