PensionReforms
Veritas propter investigationem [Truth through research]
 
TitleActual and Anticipated Inheritance Receipts (2009)
AuthorsNorma Coe
 Anthony Webb
InstitutionCenter for Retirement Research
TopicsInheritances
 Saving issues
 Financial assets
CountryUnited States
Date Published2009
Date posted on PR16 Jul 2015
  
  
 
Coe, N Webb, A, (2009). Actual and Anticipated Inheritance Receipts (2009) Center for Retirement Research,

PensionReforms’ summary and comments

For some households, an expected inheritance could be an important contributor to closing the retirement saving ‘gap’.

 

This 2009 report uses United States Health and Retirement Study (HRS) data of over 7,000 individuals to show that individuals were, on average, “slightly optimistic in their probability of receiving an inheritance”; but not overly so.  The report looked at households in both 1994 and 2004 and so was able to see how experience with inheritances turned out; over that period anyway.

 

The report suggests that inheritances tend to be received by those “already well-placed for retirement” and that probably contributes to another finding that they seem to have little effect “on wealth inequality as measured by Gini coefficients”.

 

As to the ability of individuals to predict amounts and timing:

“…the estimates of the probability of receipt and the dollar amount receivable vary appropriately with the predictors of actual receipts. In addition, we find little evidence that households generally, or even particular household types, make systematic forecasting errors.”

 

Using the present value of lifetime earnings as a measure of resources available to a household:

“We show that there is little correlation between inheritance receipts and lifetime earnings.”

 

The findings together showed that inheritances made no significant contribution to reducing inequality.

 

We might have expected that households that anticipate receiving an inheritance would save less in anticipation.

 

“In contrast, we find that households anticipating receipt actually accumulate greater wealth than other observably similar households.  We conjecture this might reflect unobserved intergenerational correlation in tastes for saving or asset allocation.”

 

PensionReforms suggests that this is much as might be expected.  The descendants of wealthier (inheritance-leaving) households are likely to have had a better start in life than others and so that advantage seems to persist in that second generation. (File size 252 KB; 38 pp) 731

 

 

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