Many Americans may have an unrealistic view of how much they’ll inherit, and that’s especially true of millennials, or the generation born between 1981 and 1996.
There seems to be a huge disconnect between what millennials think they’ll inherit and what’s actually on the way, writes Rose Kennedy for the Atlanta Journal Constitution, quoting Adam Financial Associates founder and President Mari Adam, CFP® for the article.
Kennedy repeated Mari’s advice on how to play it safe.
“Don’t count on a windfall to make your plan work,” advised Mari in her blog.
“Save and plan for the future relying only on your own resources, without any help from parents, family, or even a future partner, if you’re currently single.”
What’s the danger in counting on an inheritance? Quite simply, you may never get it. Your parents or grandparents may use up the money and not have much left to leave to heirs.
And it’s trickier than you might think to make that inheritance last, even if you get it.
“The average inheritance is gone within five years due to overspending and financial mismanagement,” said Mari. Once it’s gone, you can’t replace it.
What’s the best way to make the money last? Use it to build yourself a diversified investment portfolio that throws off a lifetime of dividends, or add to your housing equity, Mari advised.
“Use those extra dollars as the whipped cream on the sundae, meaning use them to pay for the extra things in life, like a special trip you plan once per year.”
If you spend the funds to upgrade your living standard across the board – the bigger house, the better car, the lavish celebrations, the fancier schools – you’ll likely find your money runs out long before your ambitions ever do, cautioned Mari.