If you sat down with your adult children and asked them if they expect an inheritance, you’d be surprised at their answer. In a recent study commissioned by HomEquity Bank and conducted by Ispos Reid, a full 45 percent of Canadians expressed that they do not expect an inheritance, with 20 percent not knowing if they will receive one or not. Of those who did expect an inheritance, 94 percent stated that they would be willing to give up half of their inheritance so that their parents could have a better retirement.
Are inheritances an outdated notion?
Adults who strive to make their way in the world and work hard are proud of what they’ve managed to do on their own. Self-reliance and fiscal responsibility are probably two ideals that you’ve helped to drill into the heads of your adult children. While your children probably would like certain mementos such as furniture and jewelry when you pass, it’s very likely that they’ve built up their own lives enough that they don’t need the cash that you have when you pass on.
They’d rather see you use funds for medical care and support
Your adult children are concerned about you, but once you reach retirement age they are also worried about paying their own mortgages, car payments, putting their kids through school, and more. The best thing that you can do for them prior to retirement is to reassure them that you have a financial plan for your own support that includes medical care and other help if needed.
You can still leave a legacy with a reverse mortgage
Parents who really want to leave their adult children an inheritance do not run out of options when they get a reverse mortgage. Yvonne Ziomecki of HomEquity Bank states “The majority of our clients still leave an inheritance to their children. In most cases at the time of sale our clients have an average of 50 percent of the equity left in their homes.”
Financial planning and reverse mortgages
If you have a gap in your retirement savings, reverse mortgages are designed to fill that gap without cutting into monthly and short-term retirement expenses. There are no monthly payments and the loan isn’t due until the home is sold. A qualified financial planner can help you build a plan that will reserve funds for things like medical care in the home, renovations or anything else that may be required to make your home hospitable for your later retirement years.
Once you share this plan with your children, they will have the peace of mind that you will be taken care of no matter what. That’s worth far more to them than an inheritance, which may only come to them once they have already passed through the major financial barriers of life, such as paying off a mortgage or putting their own kids through university or college.
Pre-retirement a good time to consider your legacy
It’s always awkward to plan for the time when you pass on, but the sooner you do it, the less tension it will cause in your family. Ask your adult children what they want when you pass on and to be specific. They may each want a particular piece of furniture, and sorting out minor issues like this in advance will ensure that everything is taken care of when you are gone. If you are going to draft a will, use a lawyer instead of a pre-made template to ensure its legality. If you have already drafted a will, revisit it once every few years to make sure the items it is referring to are still relevant.
Call Horizon Equity to find out more about how reverse mortgages can improve your quality of life in your retirement years.