By Stewart Koesten

Somewhere between $30 trillion to $40 trillion is expected to transfer from baby boomers and their parents to their heirs over the next 40 years. If you are in line for a piece of this wealth transfer pie, consider three key points to wisely balance potential inheritance and retirement savings:

1.       Recognize uncertainty – Every retirement plan has an element of uncertainty and inheritance simply adds another piece to the puzzle. The amount and timing of this potential asset are unknown. If your family is like most, your parents haven’t given you the full picture of their financial situation. Changes to your parents’ lives may influence the total you receive. We have seen longer life expectancies, chronic health issues, and poor investment decisions deplete what once looked like an air-tight inheritance. Many factors influence the amount you may receive and when you receive it. The important take-away is that the inheritance shouldn’t be the centerpiece of your retirement plan.

2.      Save for a comfortable retirement – A reasonable way to plan for inheritance is to secure a comfortable retirement transition on your own.  This means saving for your base level of expenses in retirement.  If and when you receive that inheritance, let that drive some of your discretionary retirement goals, such as buying a second home or taking that dream vacation.  This approach will ensure that you have a plan to cover your basic needs, while allowing an inheritance to enhance your retirement lifestyle.

3.      Open the Communication Lines – The best way to plan for your potential inheritance is to engage in financial planning with your parents.  Multigenerational planning strategies can maximize the amount of wealth that transfers to the next generation.  These strategies generally start with ensuring your parents are comfortable and confident with their own assets and retirement, and then designing a plan to transfer additional wealth to heirs.  Taking an active role in this process can help ensure that the assets are well-managed; taxes are minimized, and give you a clearer picture of what may eventually transfer to you.

Click here for a helpful article explaining more about how to talk to your parents about inheritance.

If you are lucky enough to receive an inheritance, treat it like a bonus.  If you understand the uncertainty, save for basic expenses and open communication with your parents, inheritance may help you solidify your financial plan!

For help with inheritance and other financial transition issues, more information, schedule a meeting by clicking below, contact Stewart Koesten –, or call (913) 345-1881.

Photo credit: asenat29 / Foter / CC BY