inherit“A very rich person should leave his kids enough to do anything but not enough to do nothing”–Warren Buffett

“Expecting mom and dad to help fund your retirement by leaving you an inheritance? Don’t count on it,” writes Anne Tergesen in an excellent piece. “That’s one of the messages behind a new survey by HSBC Holdings PLC, the London-based parent of HSBC Bank USA.” Other excerpts from her article:

“According to the survey, 23% of pre-retirees would ideally like to spend all of their savings and let their children fend for themselves. In contrast, a mere 9% say they want to save ‘as much money as possible to pass on to the next generation’.

“What’s behind the 14-point gap between those who want to spend it all and those who want to give as much as possible to younger generations?

“Several things. Many worry that by giving money to their children they will ‘take away the drive of the next generation to succeed’, says Brian Schwartz, an HSBC wealth adviser. Still others anticipate that due to improvements in longevity, they may spend much of their savings along the way.

“For many, though, the ‘spend it all’ mentality doesn’t necessarily equate to a desire to spend it all on themselves. Mr. Schwartz says many people in or approaching retirement are interested in or practicing a ‘new approach’ to estate planning that emphasizes giving away some money to the next generation while they are still alive. For some, the appeal is that they will get to see their children and grandchildren enjoy and benefit from their largesse. For others, it’s a way of testing the impact an inheritance will have on their progeny — in order to make adjustments if necessary. Still others want to give their money away while alive for tax reasons.

“The survey of 1000 Americans — 21% of them retirees — was part of a global survey of 16,000 people in 15 countries.

“While the new approach to inheritance makes a certain amount of sense, it nonetheless comes with risks. In particular, giving away money before death now can leave you at greater risk for not having enough in later life.

“The best plan, financial advisers say, is for families to talk — if only to establish realistic expectations.

“Not surprisingly, many families are loath to discuss these issues. Adult children, in particular, aren’t eager to ask their parents about inheritances for fear of coming across as greedy.

“In an era of low interest rates, volatile financial markets, expanding longevity, and rising costs for health and long-term care, parents may find that they need every penny for themselves. Indeed, thanks to medical gains, a 65-year-old man has a 60% chance of living to age 80 and a 40% chance of reaching 85. For women, the odds are 71% and 53%, respectively. All of this has made the 85-and-over age bracket the fastest-growing segment of the population.”