46% Have a Will

Fewer than half (46 percent) of adults in the United States have a will, according to a recent Gallup survey. Here's the question asked by Gallup: "Do you have a will that describes how you would like your money and estate to be handled after your death?"

Not surprisingly, the percentage of Americans who have a will is highest among those with household incomes of $100,000 or more (61 percent). It is also well above average among college graduates (57 percent). It is much higher among older than younger adults...

Percent who have a will

Aged 18 to 29: 20%

Aged 30 to 49: 36%

Aged 50 to 64: 53%

Aged 65-plus: 76%

Source: Gallup, How Many Americans Have a Will?

Inheritance and Retirement Risk

How much do inheritances contribute to retirement readiness? That's the question asked by the Center for Retirement Research (CRR). The answer is not much.

Researchers at the Center for Retirement Research analyzed the impact of inheritances on the National Retirement Risk Index (NRRI) using inheritance data from the Federal Reserve's 2013 Survey of Consumer Finances. The NRRI is a measure of the percentage of households at risk of missing their target retirement income replacement rate. In 2013, the NRRI was 51.6—meaning 51.6 percent of working-age households are at risk at age 65 of being unable to maintain pre-retirement spending after retirement. If inheritances were eliminated, the percentage at risk rises by only 0.8 percentage points—to 52.4 percent.

Why do inheritances have such a small impact on retirement readiness? One reason is that few households receive an inheritance—only 19 percent had ever received an inheritance, according to the 2013 Survey of Consumer Finances. Another reason is that most inheritances are modest. Among householders aged 30 to 59 who had received an inheritance, the median value was just $87,500 (including the value of inherited houses). Finally, inheritances don't have much of an impact because those who receive them are already better prepared for retirement (risk index of 40.4) than those who do not (risk index of 54.2). Among households receiving an inheritance, eliminating the windfall boosts their risk of running out of money from 40.4 to 44.8 percent—still well below average.

Source: Center for Retirement Research at Boston College, How Do Inheritances Affect the National Retirement Risk Index?

Educational Attainment Is Inherited

The "education advantage" appears to be passed down from parents to children even more strongly than the income advantage, according to a Brookings Institution study. An analysis of the educational attainment of fathers and their adult children finds 46 percent of children whose fathers were in the top education quintile also ended up in the top quintile, and 76 percent were in the top two quintiles. Doing the same analysis with incomes reveals the comparable figures to be a smaller 41 and 65 percent.

"The trend towards assortative mating—like marrying like—will likely strengthen the intergenerational transmission of high educational status," conclude the researchers.

Source: Brookings Institution, The Inheritance of Education