Moneywise: Many Canadians not planning for an inheritance

There are a lot of different numbers on the matter, but Canadians between the ages of 50 and 75 are believed to be poised to inherit an estimated $750 billion over the next decade, the largest intergenerational transfer of wealth in Canadian history. The average Canadian in this age group can expect to receive an inheritance of about $180,000 in the next decade.

According to some reports in the United States, Millennials are posed to inherit approximately U.S. $41 trillion from their Baby Boomer parents over the next 40 years.

Regardless of what the numbers might be, the fact remains that a lot of money will be flowing between generations as the Baby Boomers’ parents pass on and as Boomers themselves reach old age and prepare to pass on their legacies to their children and grand-children.

In spite of all this money that is supposedly being passed between generations, a recent study for Edward Jones has found that many Canadians are not expecting a significant inheritance and are not including an inheritance windfall into their financial plans.

A large gap exists between what Canadian Boomers are planning to leave to the next generation and what that next generation is expecting to inherit.

The survey found that the majority of Canadians near or above the retirement age — 61 per cent of those aged 55 to 64 and 57 per cent for those above 65 — say they are leaving an inheritance that will make a significant contribution to their loved ones’ long-term future. (The survey did not define what was meant by “significant.”)

At the same time only about a half of Canadians 18 to 54 see an inheritance as being part of their long-term future, and of that number fewer than 16 per cent expect it to be a significant part of their futures.

The income of those participants in the survey did not seem to be a big differentiator when it came to the expectation of an inheritance.

Fifty per cent of those whose income is less than $40,000 say they expect an inheritance while 39 per cent of higher-income Canadians who earn a salary of more than $100,000 say the same thing.

Even some older Canadians are looking forward to an inheritance with 36 per cent of those between 55 and 64 and one in three over the age of 65 expect to receive inherited financial assets in the future.

“When it comes to your future an inheritance can have a major impact on your financial strategy,” says Patrick French, principal of solutions tools and consulting with Edward Jones.

“Planning ahead so that you have an appropriate strategy in place is crucial whether or not you are expecting an inheritance from your loved ones.”

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