Almost 40% of young people aged 13 to 22 (so-called Generation Z) expect to receive an inheritance and thus do not need to save for retirement. At the same time, just 16% of their parents expect to be able to provide an inheritance for their children.
The figures come from a new study by TD Ameritrade Holding Corp. (NYSE: AMTD) cited in USA Today. The report also cites a study from PNC Financial Services Group Inc. (NYSE: PNC) in which 58% of parents surveyed said that leaving an inheritance is not a primary concern. In fact, only 2% said it was a primary goal. Saving for retirement is a primary goal of 42% of respondents.
Parents’ worries about rising health care costs and lower returns on investments are forcing them to pay more attention to their own retirement needs. With the disappearance of defined benefit retirement plans in favor of the riskier defined contribution plans, stock market performance plays a much larger role in most people’s retirement plans. Longer life expectancies play into those worries as well.
If there’s a bright side for Generation Z, parents do not expect their kids to help out if the parents’ retirement funds run out. All this means that government programs like Medicare, Medicaid and Social Security will play an increasingly large role in people’s retirements, whether or not they choose to admit it.