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Do People Save or Spend Their Inheritances? Understanding What Happens to Inherited Wealth

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  • Jay Zagorsky

Abstract

Almost $4 trillion dollars of wealth is currently held by families with a life expectancy of less than 10 years. When that wealth is inherited, will it be retained or spent quickly? Results from the NLSY79, a longitudinal survey covering people in their 20s, 30s, and 40s suggest roughly half of all money inherited is saved and the other half spent or lost investing. These spending and saving decisions are made by a concentrated group with about one-fifth of all families getting an inheritance and about one-seventh expecting to receive an inheritance. Suggestions to increase savings from inheritances are discussed. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Jay Zagorsky, 2013. "Do People Save or Spend Their Inheritances? Understanding What Happens to Inherited Wealth," Journal of Family and Economic Issues, Springer, vol. 34(1), pages 64-76, March.
  • Handle: RePEc:kap:jfamec:v:34:y:2013:i:1:p:64-76
    DOI: 10.1007/s10834-012-9299-y
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    Cited by:

    1. Korom, Philipp, 2016. "Inherited advantage: The importance of inheritance for private wealth accumulation in Europe," MPIfG Discussion Paper 16/11, Max Planck Institute for the Study of Societies.
    2. Heather H. Kelley & Ashley B. LeBaron & E. Jeffrey Hill, 2021. "Family Matters: Decade Review from Journal of Family and Economic Issues," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 20-33, July.
    3. Newall, Philip W.S. & Peacey, Mike W., 2021. "Pension behavior and policy," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    4. Dale R. DeBoer & Edward C. Hoang, 2017. "Inheritances and Bequest Planning: Evidence from the Survey of Consumer Finances," Journal of Family and Economic Issues, Springer, vol. 38(1), pages 45-56, March.
    5. John Edward Sabelhaus & Jeffrey P. Thompson, 2021. "Racial Wealth Disparities: Reconsidering the Roles of Human Capital and Inheritance," Working Papers 22-3, Federal Reserve Bank of Boston.
    6. Che-cheong Poon & Tai-Yuen Hon, 2015. "Household Savings in Hong Kong: A Statistical Analysis," Journal of Family and Economic Issues, Springer, vol. 36(3), pages 353-368, September.
    7. Gustavo A. Caballero, 2017. "Responsibility or autonomy: children and the probability of self-employment in the USA," Small Business Economics, Springer, vol. 49(2), pages 493-512, August.

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    Keywords

    Bequest; Inheritance; Saving; Wealth;
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