On your end, estate planning focuses on passing your assets down to the next generation. You probably ask yourself questions like:
- How can I divide things evenly?
- How can I avoid estate disputes?
- What do I do with the family home?
- What should I do with family heirlooms that the children cannot split up?
- Do I need to use a trust?
- Do I want to give to charity?
These are just a few examples, but they're a good place to start. They help you focus on your own goals and work toward getting that plan in place.
For the children, though, that same process of passing on assets may have a very different focus. They're thinking about using the money to retire. Exactly what they get, and when they get it, becomes incredibly important to them.
Part of the issue here is that many people do not save for their own retirement at all. In a study that was reported on in the spring of 2019, researchers found that:
- 21% of Americans did not save any of their money at all.
- Another 20% did save some, but it was merely 5%.
- The largest group saved 6-10% of their money, with 28% of Americans saying that was their plan.
- Just 10% of people saved 11-15% of their money.
- Only 16% of all Americans claimed they were able to save up more than 15% of what they earned.
As you can imagine, most people will not be able to retire on just 5% of their savings, and clearly those who save nothing will have very few options when they want to stop working. If you assumed that your children needed to save at least 15% of their money to retire someday, do you think they're in that tiny 16% of the country that can afford to do so?
This is why children often look to their inheritance and hope it will save them. They didn't put anything away. They can't retire. They have no idea what they'll do. All they hope is that their parents will leave enough money behind that they can stop working someday in the future.
Setting up your plan
You may want to talk with your children when you start doing your estate planning. Find out where they're at and what they expect. This gives you a chance to address those expectations in one way or another.
Regardless of how you decide to approach this, just remember how important it is for your family. Look into all of the legal options you have to pass on your assets and find out how to set up a plan that does exactly what you need it to do.