The fact that almost 70 percent of young people expect to get an inheritance may mean they're in for an unpleasant surprise, since only 40 percent of their parents plan to leave one. That's according to new research from the Natixis U.S. Investor Survey.
The research shows that the under-35 set may need to question their assumptions about retirement and how to fund it: "Millennials say they plan to quit working at age 59, on average, a full six years earlier than Baby Boomers, who expect to retire at age 65." To help make that possible, they're hoping for a windfall.
Unfortunately, it seems, many of them are going to be disappointed.
According to Natixis, "44 percent of Boomers don't have a will; over half [57 percent] don't expect to have money left to pass on," whereas "another 35 percent plan to spend whatever money that's left on themselves."
Meanwhile, 24 percent of Boomers expect that "contributions from children" will play an important role in funding their retirement. No word on whether, or how, millennials are anticipating handling that expense.
Is this a failure of communication or of planning? Perhaps both. No one, after all, looks forward to awkward conversations about money or about death and its ramifications.
And another rude surprise could await today's young workers, many of whom aren't accounting for other relevant elements in their calculations, Natixis reports: "Less than 20 percent of Millennials say they have factored inflation into their retirement savings planning."
Even an inflation rate of three percent, the report notes, "could mean that a $100 purchase today would cost $181 by the time millennials retire, which could severely accelerate the pace with which they burn through accumulated savings."
Other surveys have also concluded that many young people have overly optimistic ideas about their financial futures. Research by Apartment List, for example, found that it will take most millennials about twice as long to buy a home as they expect. A majority of those surveyed said that purchasing real estate is in their five-year plan, but in actuality, based on their savings rates and locations, they are 10 or more years away from realizing that dream.
Still, millennials don't have a uniformly rosy view of what's to come. Almost half, or 41 percent, of young people surveyed by Natixis say that they "don't believe government benefits will be there" when they need them. Gen X'ers and Boomers, both of whom are closer to retirement, have more faith in the system: Only 33 percent of Gen X'ers and 22 percent of Boomers worry that Social Security will fail them.
Though Natixis also found that, whether or not millennials expect the government to come through, they're relying on it anyway: 76 percent of young people surveyed said Social Security and other benefits will be an important source of revenue for them after they stop working.