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Both groups are hesitant to leave behind large inheritances, but not for the reasons you might expect.

3 minute read

Bill Gates is so rich that it’s not worth his time to stop and pick a $1,000 bill up off the ground, but he isn’t leaving much of an inheritance to his kids — just $10 million each of his $80 billion fortune.

“They have to find their own way. They will be given an unbelievable education and that will all be paid for,” Gates told the UK’s Daily Mail in 2011. “And certainly anything related to health issues we will take care of. But in terms of their income, they will have to pick a job they like and go to work.”

A growing number of millionaires and billionaires are hesitant to leave large fortunes to their kids, according to a new study by Merrill Lynch. The study found that nearly half of high net worth individuals are concerned about leaving too much money behind. Two-thirds think leaving inheritance would have a “negative impact” on the recipients. Just 42 percent plan to leave behind an inheritance.

In that respect, millionaires aren’t too different from us plebs. Here’s why…


Both prefer to distribute over a lifetime

Another study by HSBC Bank revealed just 9 percent of working-age people plan to save as much money as possible to pass on to the next generation. Instead of leaving behind money and creating trust-fund kids, it seems Americans prefer to distribute their wealth to family members while they are still alive.

In the HSBC study, nearly a quarter of working-age people felt it was better to spend their savings while they were still living. From the report: “These results suggest Americans have an overall preference to spend or give away retirement savings during life, rather than pass it on to heirs after death.”

You should be careful not to outlive your savings by giving it away to your heirs, said Andrew Ireland, head of the U.S. HSBC Bank, in a statement:

Living inheritances add another dimension to the already complex financial pressures faced by retirees. A desire to support loved ones during your lifetime is of course understandable, but for many people this comes at a cost both to their retirement dreams and to their ability to leave a legacy.

How to make sure you have enough to leave a legacy

Most people don’t know what to do with their savings — possibly because they don’t have any. No need to worry about an inheritance plan if there aren’t any savings to inherit. Here are the best ways to save…

1. Start early with a savings plan. 

Half of Americans have nothing saved for retirement, so it’s especially important for young people to start savings plans of their own. That could mean investing in an IRA, opening a 401(k), or, if you want to start small, opening a MyRA account with as little as $25. (I opened one in January and now have $80.18 in it. Thanks Obama.)

2. Don’t let familial guilt damage your retirement savings. 

A recent survey of 2,000 parents who have both a retirement account and kids younger than 16 found that half of the parents were willing to dip into their retirement savings to send them to college. And 52 percent were willing to take on at least $25,000 in debt to pay for their kids’ college.

Why would you sabotage yourself like that? Almost 60 percent of parents said it was because they didn’t want to be perceived as failures. But the irony is that going into debt to help your kids pay for college will probably result in them having to take care of you later on — when your health is failing and you have no  retirement savings to fall back on because you blew it on your kid’s expensive, 4-year liberal arts degree.

3. Consider semi-retirement before you actually retire.

The HSBC study found that semi-retirement, or a middle ground between full-time work and retirement, is “fast becoming the norm as 42 percent of working age Americans say they want to semi-retire before retiring completely.” This may be a good option for workers who love their careers and want to keep working, or if they just want to keep some cash flow and do part-time work.

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About the Author

Jess Miller

Jess Miller

Jess is the former assistant editor at and previously worked for National Journal and Scripps Howard. Her work spans from print to financial services to UX/UI design, and her expertise includes copywriting, social media, content marketing, design, and editing.

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