Of that $8.4 trillion, $2.4 trillion has already been received and the remaining $6 trillion is anticipated. Researchers at Boston College expect two-thirds of boomer households will get an inheritance, but the windfall will be unevenly distributed. For people fortunate enough to get a financial hand-me-down, the median amount is projected to be $64,000 and the mean to be $292,000.
To illustrate that point further, the report projects the bottom wealth decile to get an average of $27,000 versus $1.5 million for people in the top decile.
"All these numbers are sensitive to time discounting," says Anthony Webb, a research economist at the Center for Retirement Research. "When calculating an inheritance over a person's lifetime, you want to take inflation into account."
And, of course, other factors to take into account include ever-growing lifespans that will likely lead to mushrooming health care costs that can put a big dent into an inheritance. While any inheritance money that boomers receive will be greatly appreciated, it won't be a big difference maker for a lot of recipients and they shouldn't view it as panacea for their financial situation.
"An anticipated inheritance isn't a good substitute for good financial planning for retirement," Webb says.
American Funds Deemed Best Fund Family
The American Funds scored best in positive perception in a recent survey of financial intermediaries, including advisors. The survey, conducted by kasina and Horsesmouth FA Vision service, found American Funds had the highest score by far in the FA Vision Brand Index, which rates how a firm is perceived based on attributes that include dedication to advisors, global expertise, ethics, cost, innovation and trustworthiness.
American Funds' weighted index score of 25.06 was roughly three times the scores registered by The Vanguard Group (8.58) and Franklin Templeton Investments (8.46). The rest of the top ten comprised BlackRock (excluding iShares), PIMCO Funds, iShares, Fidelity Investments, Dimensional Fund Advisors, Ivy Funds and Oppenheimer Funds.
"It is notable that the top brands on the FA Vision Brand Index are not only the traditional powerhouse brands in the advisor marketplace like American, BlackRock and Franklin Templeton, but also firms such as DFA, iShares, Ivy and Vanguard, which would not have shown up on this list only a handful of years ago," says Lee Kowarski, principal at kasina. "This shows that advisors are open to new offerings and underscores the importance of maintaining a powerful brand for established players."
Vanguard, long a leader in the direct-sold category, is now making significant headway in the advisor-sold market.
BlackRock was chosen as tops in innovation by 10.9% of advisors, but Kowarski said that low of a score indicates that none of the fund families are "particularly innovative." "This leaves a large void for innovative asset managers to fill," he said.
What You Should Know About LTC Deductions
Long-term care insurance has become increasingly important as the first wave of baby boomers turn 65. When advising clients about this much-misunderstood product, consider the variety of tax advantages that can come with LTC policies.
For individuals who itemize their tax deductions, LTC insurance premiums can be deducted as a medical expense, says a new pamphlet from the American Association for Long-Term Care Insurance, a trade group based in Westlake Village, Calif. But as with all medical-expense deductions, only those that exceed 7.5% of adjusted gross income are deductible.