A significant number of products of Generation Z (13-22) believe they will receive an inheritance from their parents so they won't need to worry about saving for retirement. However, only a small percentage of parents say they will leave an inheritance.
Will the teenage sons and daughters of today wake up to reality in a couple of decades when they realize their parents will not leave anything behind for them? A new report suggests that kids are expecting an inheritance, while parents say they won’t leave anything behind.
Many young Americans who have lived through the Great Recession, also known as Generation Z, do not seem affected by today’s economic woes and the financial pain their parents are going through. Why? According to a study by TD Ameritrade titled “Generation Z and Money Survey,” 39 percent say they will receive an inheritance. Therefore, they feel they don’t have to worry about saving for their winter years.
Only 16 percent of parents said they are expecting to leave behind an inheritance. As parents face tremendous financial pressures in an uncertain economy, the youth are less likely to receive anything. The reasons, however, are not just due to a lack of funds, but rather their priorities.
According to a separate PNC Survey, 58 percent of respondents said leaving an inheritance is not their primary concern, while only two percent noted it is their principal objective.
“There is a little bit of the halo effect of youth vs. the reality of what the situation will be like," said Carrie Braxdale, managing director of investor services at TD Ameritrade, in an interview with USA Today.
Braxdale added in another interview with ABC News that when you’re young and your parents are looking after you and providing all of your necessary needs, it’s not “unreasonable” to expect that this can go on in perpetuity.
Experts warn that teenagers need to understand that their parents are facing a perilous future. Parents are in a world of low interest rates, the rising cost of living and the dangers of Social Security and Medicare facing insolvency. The research shows that parents are helping pay for college, but mothers and fathers don’t expect their kids to help them out if they run out of money in retirement.
The online study was conducted with 2,000 U.S. residents (1,000 kids and 1,000 parents) from Apr. 27 to May 1, 2012. It contains a margin of error of +/- 3.1 percentage points.
For youth trying to look after their finances, here is a list of articles that might assist you in your endeavours:
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