America’s Millionaires Are Rethinking Leaving an Inheritance as Wealth Feels Less Secure

It used to be that being a millionaire meant a person could retire and live a comfortable life. But not even millionaires may believe that anymore.

There are 23.8 million millionaires in the U.S., the most of any country in the world, but only 36% of them consider themselves "wealthy," according to a Northwestern Mutual Planning & Progress Study.

"Americans are living longer these days, and with health care and long-term care costs consistently on the rise, many are worried that they will outlive their savings," Matthew R. Walsh, a certified financial planner, private wealth adviser, and partner at Continuum Wealth Partners, a Northwestern Mutual Private Client Group, tells Realtor.com®.

Of the millionaires surveyed, only 53% expect to leave an inheritance or charitable gift as part of their estate plan. Within that group, just 12% identify leaving something behind for the next generation as their single-most important financial goal.

"So, while many Americans likely want to leave an inheritance to loved ones or make charitable gifts to organizations that are important to them, they aren’t confident that they will have the funds to do so. That’s why it’s so important for people to develop a comprehensive financial plan that addresses the impact that risks like rising costs can have on a nest egg," says Walsh.

The study looked at U.S. adults' attitudes and behaviors toward money, financial decision-making, and people's long-term financial security.

"For many Americans, it’s not a lack of generosity, it’s a lack of confidence that they’ll have enough for their own needs," Jonathan White, a Boston-area trust/estate and real estate attorney, tells Realtor.com.

"A lot of families feel squeezed by the cost of living, long-term care, and uncertainty about their own retirement. People worry they’ll need every dollar to take care of themselves."

Millionaires' mindset on money was "clear, disciplined, advised, and optimistic," according to the report. American millionaires are much more likely to report higher levels of financial discipline, confidence, and clarity than the average American.

"A million dollars does not go as far as it once did," Jay Zigmont, financial planner and founder of Childfree Wealth, tells Realtor.com. "If people are millionaires primarily due to their primary house value, they may feel cash poor."

Of the American millionaires surveyed, 88% felt they have good clarity on exactly how much they can spend now versus save for later, compared with 68% of the "general public." At least 77% of millionaires said they know how much money they'll need to retire comfortably. And when it comes to saving, 76% said they are a "disciplined financial planner."

"In the past, retirees used to plan on leaving the family home and investment portfolio completely untouched," Eric Croak, CFP and president of Croak Capital, tells Realtor.com. "Today, most retirees want to “use” their assets to enhance quality of life while they are still alive."

Croak explains the increasing cost of health care also creates a fear that they may not have enough wealth to maintain their lifestyle.

Financial planning

When it comes to wealth, planning for the future is key to financial success. The study found that 74% of American millionaires are likely to work with a financial adviser—that's more than double the proportion in the general population (34%).

Ninety-three percent of millionaires say they've received financial advice. As to whom millionaires in the U.S. trust the most for financial advice: financial advisers topped the list at 60%, followed by spouse/partner (10%), business news (8%), and a family member (7%).

Millionaires who have a financial adviser are more likely to say they expect to be financially prepared to retire when the time comes (92%) than do millionaires who do not work with one (76%). The study also found that millionaires with a financial adviser expect to retire two years earlier than those who do not partner with one.

"We know that a $90+ trillion Great Wealth Transfer is approaching. Today’s baby boomers are expected to pass along an extraordinary amount of wealth to the next generation—but the real question is 'who will receive it?'" says Walsh. "Our Planning & Progress Study data shows that the number of inheritors might be smaller than people realize—and as a result, the importance of planning for their own financial security remains paramount."

Being secure with money creates strong relationships. The millionaires with financial advisers surveyed felt the current state of their relationships with family is "strong" or "very strong" (90%). They felt similarly about their friendships (86%), job stability (88%), mental health (90%), physical health (87%), and finances (92%).

"I’ve seen a growing trend of people choosing to spend down on life experiences, education, and philanthropy in their own lifetimes, things that they can enjoy or feel tangible about today, such as setting up a $50,000 college trust for a grandchild or making a $100,000 commitment to a local charity instead of leaving a lump sum estate gift," says Croak.