The Problems of Inheritance
by Efin Advisor | June 20, 2008
You’ve probably heard about the bumper sticker, even if you haven’t seen it. It’s the one on the backs of Cadillacs in Florida and on Lexus bumpers in Arizona that reads: “I’m spending my children’s inheritance.”
While this may cause a chuckle, sadly it is not far from the truth in many cases. Worries about the economy and the rising costs of health care are causing many to fear that they will either receive little to no inheritance or that they may not be able to hand down some of the wealth they have created.
There are several reasons why the wealth of our nation’s senior citizens is depleting. Amongst these are the staggering costs of health care for the elderly. Mutual Fund Broker Fidelity figures they will need $225,000 to cover their health care costs in retirement, though that doesn’t include over-the-counter drugs, dentistry or nursing home expenses. This drain is something few people could have expected, and most are not prepared for.
In addition to health care costs, fewer and fewer people who retire do so with pensions. This not only hinders a person’s ability to pay for health care (since some pensions have health care benefits) but also means our nation’s elderly have to go to more volatile means for ensuring income after retirement. As large numbers rely strongly on stocks to finance 20-plus years of retirement, vacations, Cadillacs and other supposed luxuries of old age, many will inevitably lose big. Considering the state
of the economy now, unstable investments is a risky way to go.
This leaves many Americans in sticky situations. How can they help their children in the future with these hurdles in place? One method, which many people have successfully turned to, is buying term life insurance. Life insurance allows for a small investment on the retirees part, and ensures a minimum level of security for their loved ones down the road.
Comments
Got something to say?