Their rising health care costs are threatening the solvency of Medicare. They’ve only saved a fraction of what it will cost to pay for their retirement years. Now, the Me Generation is set to scoop up trillions more wealth from their parents and grandparents.
Baby boomers – who already have inherited some $2.4 trillion from older generations – are in line to inherit $8.4 trillion more, according to a study by the Center for Retirement Research at Boston College, sponsored by MetLife. That’s on top of another $3.2 trillion boomers can expect to collect from their parents while the older generation is still alive.
The wealth transfer represents a nice chunk of change. Total household wealth for all Americans was just shy of $66 trillion in 2007. That means boomers will take in roughly 16 cents of every dollar of American household wealth. About two-thirds of all boomers will inherit something; the median transfer amount will be $64,000 – per boomer.
But like everything else related to wealth in America, there will be a wide range between the biggest and smallest inheritances, according to the study. Boomers from the richest families are in line for as much as $1.5 million each; those at the bottom of the inheritance latter will get just $27,000.
Even with a median inheritance of $64,000, most boomers won’t be able to make up for years of undersaving by waiting around for their parents' money. If Mom and Dad are living in a big house and globetrotting in their golden years, boomers shouldn’t count on getting their hands on that wealth, according to Sandra Timmermann, director of the MetLife Mature Market Institute.
“Any prospective inheritance is uncertain,” she said. “Parents or grandparents who expect to leave a bequest may revise their plans based on fluctuations in their asset values. Wealth may be consumed by medical or long-term care costs — or simply by virtue of long life.”
While some boomers may get bailed out of their busted 401(k)s by their forebears’ money, most still face a big savings shortfall. That looming crisis leaves many with stark choices, said Alicia H. Munnell, co-author of the study and director of the Center for Retirement Research.
“Policymakers should be developing policies and programs to boost Americans’ savings and promote longer work lives,” she said.