Do You Expect to Receive an Inheritance? Study Shows Most Americans Say They Aren’t Ready to Manage It

Many of us dream about receiving a financial windfall but the majority of us won’t know what to do with the money when the time comes. 

According to New York Life’s Wealth Watch Survey, only 42% of adults who expect to get some kind of inheritance said they feel very comfortable handling the new wealth that will be passed down. In addition, the survey found women are nearly twice as uncertain about managing an inheritance. While 12% of men who expect an inheritance said they had doubts, 23% of women said they had fears.

One reason that people lack confidence in managing their eventual inheritance may be the size of the anticipated bequest. The New York Life survey found that, on average, people expect to receive a whopping $738,724.23.

“Navigating competing priorities and family dynamics while grieving can make it even harder to know where to start or where to get reliable and objective advice,” said Suzanne Schmitt, head of financial wellness at New York Life. “While Baby Boomers are the most likely generation to say they prefer to get guidance from a financial advisor or tax professional (29%), Gen Xers and Millennials, two cohorts set to inherit from Baby Boomers through 2045, could benefit from seeking professional advice, too,” she also said.

However, trillions of dollars will be inherited in the coming years in what’s being called “The Great Wealth Transfer.” The massive transfer of wealth will see the aging Baby Boomers pass as much as $84 trillion, primarily to Generation X and Millennials. To put it in perspective, that amount of money is more than 10 times the combined gross domestic product of California, Texas and New York. 

According to the statistics compiled by New York Life in the study, this wave of wealth transfers is already underway:

Meanwhile, the majority of people who anticipate an inheritance expect to receive cash. Forty-three percent expect to receive owned property like a house and 28% anticipate receiving investments like stocks and bonds. Nearly a quarter of people (24%) who think they’ll receive an inheritance expect proceeds from a life insurance policy, while 21% expect jewelry or other family heirlooms, and 14% expect to inherit an annuity.

The top priorities for beneficiaries of these windfalls aren’t surprising. The first use of the money is to pay off debt (37%), followed by adding money to retirement savings (35%) and preserving the inherited assets so that they can be passed down to the next generation (26%). When it comes to retirement, however, 44% of adults say that they don’t have the support they need to navigate the financial challenges.

 “The data show us that people continue to be focused on the basics — paying down debt, building emergency savings, and contributing to their retirement — but it can feel incredibly difficult to plan for longer-term goals like buying a home, growing your family, or retiring when day-to-day challenges are occupying your time and attention,” Schmitt added.

Receiving any kind of financial windfall will challenge your thinking about how to manage the new-found wealth. In fact, less than half of the people who expect to receive an inheritance say they’re very comfortable managing it. Whether it’s a small inheritance or a big lottery payout, experts advise against making impulsive decisions around the windfall.

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