Royce Shook

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Attitudes, behaviors and lifestyle impact ideas about inheritance

While seniors often take pride in living frugally to provide for their loved ones after they have passed on, Boomers have grown up understanding there is a direct correlation between hard work and rewards, and may, therefore, believe that hard-earned rewards should be enjoyed.

According to the last BMO Wealth Institute report, Boomers are concerned about outliving their retirement savings and some are considering replenishing their retirement resources by working longer or returning to work. Conversely, seniors may feel more secure about their financial situation, given their lifestyle and affinity for lower-risk investments. In the current environment, one would presume that an individual’s priority would shift from leaving a legacy for future generations to self-preservation.

Carrying debt into retirement may be a reality for some. In fact, as members of a credit-driven economy, some Boomers may carry more debt into retirement than their parents did. Of the Boomer retirees surveyed in 2006, 64% reported that they carried debt into retirement. Both Boomers and seniors are responsible groups who are focused on repaying their personal debts. While the majority of Boomers and seniors surveyed claimed that paying off their mortgage and personal debt is important to them, any unpaid debts will reduce the estate value for heirs.

On the one hand, Boomers are an extremely generous bunch, with strong ideals and a deep sense of commitment towards loved ones, and the world they will pass on. On the other hand, given the current economic climate and other challenges mentioned earlier, some Boomers are torn between a desire to give and a sense of responsibility to remain self-sufficient throughout their retirement years.

Many Boomers still, stand to receive an inheritance, and the majority of them expressed a desire to pass on a legacy for future generations to enjoy. Nevertheless, the reality is a lot more complicated. Boomers who still expect to fund their retirement with an inheritance may find that reality falls short of expectations, and future generations who are counting on receiving an inheritance should be aware of the many risk factors that could reduce the amount of money, they will receive.

There are strategies that Canadian families can take to help achieve their inheritance vision and maximize the intergenerational transfer of wealth. Communication with advance planning is key. While proactively initiating a family conversation on the transfer of wealth may seem emotionally daunting to some, the risk of holding onto unrealistic expectations is likely to have far worse consequences. By having open intergenerational conversations about inheritance and with the help of a financial advisor, Boomers and their families can be empowered to make prudent planning decisions about their legacy plans.


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