Many Americans are quietly expecting a financial boost in retirement, whether it’s from their parents’ estate, the sale of a family home or generous annual gifts. But relying on money you don’t have yet is one of the riskiest mistakes when planning for retirement. Gifts and inheritances can be unpredictable, delayed or reduced by taxes, long-term care costs or family disputes. Here’s why you shouldn’t base your golden years on someone else’s balance sheet – and what you can do instead.
1. Inheritance is not guaranteed, even when promised
Nearly half of retirees who expect an inheritance never receive one. Many older adults spend their savings on healthcare, assisted living or debt before passing on assets. Nursing homes, estate taxes and legal fees can shrink estates faster than families expect. A parent’s verbal promise or will also does not guarantee payment; wills can change, or assets can disappear due to expenses or inflation. Counting inheritances too early can create a dangerous illusion of financial security.
2. Gift taxes and limits may reduce the amount you receive
Generosity has tax consequences. The Internal Revenue Service (IRS) allows annual donations of up to $18,000 per recipient (as of 2025) without triggering a gift tax return, but anything above must be reported. Although most families do not pay the tax directly, large transfers can count toward the lifetime exemption. If your financial plan assumes you will receive large cash gifts, keep in mind that these may be deferred, distributed, or reduced. Always keep in mind how taxes can change the true value of what is given.
3. Emotional expectations can backfire financially
Relying on a future inheritance can lead to emotional and practical problems. Financial expectations often strain family relationships, especially between siblings. Disputes about inheritances or alleged ‘favorites’ can drag on in court for years. Planning independently frees you from emotional dependence and family friction. Treat every inheritance as a bonus and not as a pillar of your retirement plan.
4. Healthcare and long-term care costs can erase legacies
A single medical crisis can deplete what was once a comfortable estate. The Kaiser Family Foundation (KFF) reports that long-term care costs now average more than $100,000 per year in many states. Unless your parents have long-term care insurance, these expenses could negate the intended gifts. Rules for reducing Medicaid spending could also force the liquidation of assets before government coverage begins. Never assume that money will remain untouched for inheritance; it is often the first to go when health deteriorates.
5. The smart move: build your own plan first
Retirees should view any gift or inheritance as unexpected income and not as a guaranteed part of their savings. Base your plan on assets you control, such as your 401(k), IRA or Social Security, and treat family money as a cushion. Financial independence gives you more flexibility and fewer surprises. If an inheritance does come in, you are in a position to invest it strategically rather than using it to cover shortfalls.
6. Protect yourself from false security
A well-rounded retirement plan is not dependent on someone else’s generosity. By saving, diversifying, and budgeting around what you own (not what you might receive) you create a safety net that no market or family event can shake. If an inheritance does come, it will be an opportunity, not a salvation.
Do you expect to receive an inheritance or do you plan to leave one? Share how it fits (or doesn’t fit) into your retirement strategy in the comments below.
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Teri Monroe started her career in communications with local government and nonprofit organizations. Today, she is a freelance finance and lifestyle writer and small business owner. In her free time, she enjoys golfing with her husband, taking long walks with her dog Milo, and playing pickleball with friends.
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