7 reasons boomers aren't leaving as many kids as they expected

According to a recent GOBankingRates report, high net worth individuals from Warren Buffett and Bill Gates to Mark Zuckerberg have publicly stated that they do not plan to leave inheritances for their children.

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Some people plan to donate money to charity. Others — like musician Sting, who has a net worth of $550 million — said he plans to spend most of his money. He told the Daily Mail that he has developed a strong work ethic in his children, so he is not expected to help them financially.

Yet it's not just the celebrities and top names on the Bloomberg billionaires list who don't plan to leave traditional legacies for their loved ones. Even though baby boomers could transfer up to $68 trillion in wealth to the younger generation by 2030, it might not come through traditional means. We spoke to financial advisors to find out the reason.

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1. Parents want to reduce sibling conflicts

Joe Farren, president and partner at Aquilance, a wealth advisory firm for high-net-worth individuals and families, said he's seen many parents distribute wealth while living for a variety of reasons.

“Some parents are not leaving a legacy after their demise. They are now passing the money on to their children,” he said. “I think it's an attempt to reduce the family dynamic fights after the fact, where mom and dad are gone and now the kids are fighting.”

2. They are donating to charity

One way to avoid fighting over an inheritance is to leave it all to charity, a strategy many celebrities are adopting. For those who choose to take this route, you can still include your adult children, Farren said.

“They should have extensive discussions with the entire family about values ​​and what is important. Is it helping the community at large? Is this art? Is this education? The generation that is not inheriting wealth can still have a say in how to distribute and use that wealth in the most effective way,” Farren said.

3. They want to teach kids to manage money

High net worth individuals will also want to ensure that their family legacy lives on for more than one generation. This often means having adult children around to guide them in wise financial choices. Farren reported that many families lost their wealth within a few generations.

“Legacy is spread too thinly, and future generations do not know how to maintain, hold and/or generate their wealth,” he said. “If those creating wealth are, for lack of a better word, still present as a resource for their children, then the children are not going blind at that point.”

Farren said that, often, high-net-worth families can provide adult children with tremendous opportunities, including education, resources and seed funding for business initiatives. But it is up to the next generation to become self-reliant after receiving those benefits. “Having been given every opportunity to succeed in life, they now need to do so on their own,” Farren explained.

4. They want to see positive impact now

It's not just wealthy families that are embracing the concept of living inheritance, said Shawn Lovison, CFP, CPA and founder of Purpose Built Financial Services, LLC. “Many boomers now prioritize experiences and helping their children. “They also choose to finance their grandchildren's college, make advance payments or support their children as they start businesses.”

5. They want to enjoy it to the fullest

Lovison said this new philosophy is partly based on Bill Perkins' best-selling finance book, “Die with Zero: Getting All You Can from Your Money and Your Life.”

“Traditionally, Boomers have prioritized leaving a legacy. However, there is a change. The 'Die With Zero' philosophy matches his desire to fully enjoy his retirement years, Lovison said.

6. They don't have much left to give

Of course, you don't always have a choice about what to do with your money in retirement. A recent study from Empower reported by GOBankingRates showed that 67% of Americans would like to leave an inheritance for their loved ones, but 34% fear they won't be able to do so.

“In the past, you worked and saved money in your retirement accounts,” says Patrick Simasko, elder law attorney and financial advisor at the Simasko Law Firm. “This was extra money on top of your Social Security income and monthly pension. This meant a lot was left over for their families. Now that pensions are almost non-existent, retirees have Social Security income and a 401(k) to live on. “People don’t have much left.”

7. The money is going toward long-term care instead

One of the biggest culprits that drains retirement funds is long-term care. “A third of us will need long-term care for an average of 32 months, but very few of us have long-term care insurance. Many people have to pay for care themselves. All of this will eat away at the legacy you plan to leave behind,” Siemsko said.

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Lovison agreed, “Unexpected health care and long-term care costs associated with extended life spans erode retirement savings.” “The middle class is not untouched by this. “Boomers sometimes feel they have less to look forward to than expected.”

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This article originally appeared on GOBankingRates.com: Generational wealth: 7 reasons boomers aren't leaving as much to their kids as expected

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