Magazine article USA TODAY

Most People Blow Half of Inheritance

Magazine article USA TODAY

Most People Blow Half of Inheritance

Article excerpt

Adults who receive an inheritance save only about half, while spending, donating, or losing the rest, indicates a study in the Journal of Family and Economic Issues. The results are good news for retailers, restaurant owners, and people in the service industry who receive that windfall. However, it is bad news for those who are concerned about the low U.S. savings rate, notes Jay Zagersky, author of the study. "I came into this study thinking that people would save more of their inheritance than what I found. The fact that people spent about half is disappointing in soma ways, but not shocking."

Over the next 10 years, elderly Americans are expected to transfer almost four trillion dollars to their heirs. "If these findings are correct, this means about two trillion dollars will be saved and two trillion dollars spent," Zagorsky points out.

Much of the data from the study came from people who participated in the National Longitudinal Survey of Youth 1979. The NLSY79 has interviewed the same group of Baby Boomers--who were in their 20s, 30s, or 40s during the time covered by this study--some 23 times since 1979. The NLSY79 is conducted by the Bureau of Labor Statistics.

Some 34.9% of all inheritors saw a decline or no change in their wealth after getting an inheritance. …

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