You Could Just Spend it All: Why More Retirees Are Planning To Leave Nothing Behind
Written by
Laura Bogart
Edited by
Kristen Mae
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Movies and TV have ingrained the assumption that elders will leave enough money behind for their heirs to squabble over dramatically. Even if their family name doesn’t conjure images of champagne wishes and caviar dreams, many people still expect they’ll receive some money or other assets from their parents or grandparents.
They might end up disappointed.
Increasingly, the trend among retirees involves using all their money — even if it means leaving nothing for their loved ones. A recent survey by Northwestern Mutual found that only about 22% of baby boomers and 22% of Gen Xers plan to leave behind a financial gift. This trend certainly complicates the narrative of a “great wealth transfer” between generations.
Curious why more retirees are planning to leave nothing behind — and what they’re doing with their money instead — GOBankingRates consulted some experts.
Increased Longevity Means Rising Health Care Costs
As the owner of Home Helpers Home Care, Ocean Van has advised many retirees on how to navigate rising health care and long-term care costs — concerns that are only becoming more pressing as people live longer. Typically, he sees retirees address these costs via reverse mortgages, cashing out life insurance policies or selling their homes.
He’s noticed that unless there’s significant family wealth or a tradition of passing down an estate, adult children often prefer that their parents use their assets to cover the costs of support and care — rather than live too far below their means, rely on government programs or turn to them for financial support.
The key for retirees and their adult children is to plan together and communicate clearly.
“Retirement can last 20 to 30 years, and things change quickly. That’s why communication, frequent reviews and preparing for different scenarios are so important,” Van said. “Put essentials in place: health care directives, powers of attorney, wills, financial plans, medication lists and provider contacts.”
When retirees engage both professionals and their adult children in these discussions, Van said, it’s generally easier for families to adapt along the way.
Older Generations Want To Have Fun
In his own conversations with retirees, Trevor Houston, CEO of ClearPath Wealth Strategies, LLC, has noticed that the common goal of leaving a financial legacy for children and grandchildren has shifted.
“The baby boomer generation wants to enjoy life to the fullest after working and spending their lives serving others,” he said.
Instead of stressing about how to grow a nest egg that could support loved ones down the line, some retirees are focused on traveling and fulfilling their own life goals. Houston says the “spend-down method” is becoming more prevalent in this scenario.
“Retirees first save enough money to retire comfortably, then spend that money down, hoping they don’t run out,” he said. “I’ve even heard them say, ‘I want to bounce the last check at the funeral home.’ The goal is to enjoy the most of what they have worked so hard to build over their lifetime.”
Instead of sharing money, Houston said some retirees now prefer to share life experiences and wisdom with future generations — a gift that can be even more precious than money.
They Simply Can’t Afford To Leave Money Behind
Houston agrees with Van that rising health care and long-term care costs are major factors in the trend. But he’s also quick to point out that inflation and increasing costs across the board play a role — along with unexpected bumps in elders’ career paths.
“For some, the traditional dream is having enough wealth that you can simply live off the interest, never touching the principal. That way, the nest egg continues to grow and ultimately passes down to the family,” he said. “But the truth is, many Americans fail to reach their retirement goals because of rising costs and unexpected life events like career transitions, putting them further behind.”
Tips for Ensuring You Don’t Outlive Your Retirement Savings
Whether your goal is traveling more or leaving an inheritance for your children, the question of how to use your retirement savings wisely — while also preparing for less exciting realities like health care costs — becomes crucial. So, how do you make sure you don’t outlive your money?
Houston offers these practical tips:
- Work with a professional to create a strategy that protects you from outliving your retirement savings.
- Consider guaranteed income solutions, such as annuities, to supplement your income for everyday expenses, beyond what Social Security or pensions can cover.
- Build a solid emergency fund to protect yourself from sudden expenses. As Houston reminds, “Medical emergencies and inflation are real.”
- Use life insurance as a legacy tool to pass money to your children or grandchildren.
“This plan lets retirees spend confidently and still create an inheritance for their loved ones,” Houston said. “It’s a way to maximize both legacy and lifestyle without having to choose between the two.”
The Bottom Line
Reports of a great wealth transfer may not come true as more retirees choose to focus on their own health, enjoyment and financial reality. Factors like rising health care costs, inflation, career setbacks and the desire to enjoy their golden years are all contributing to the decline in retirees leaving behind an inheritance.
“There’s no one-size-fits-all for retirement. That’s why it’s so important to step back and look at where you are today, what you want for tomorrow and what it’ll take to get you there,” Houston said. “Whether it’s living off the interest, spending down your retirement or using insurance to leverage your dollars and leave a legacy, the key is building a plan that matches your goals.”
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