Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 10878 FAMILY CHARACTERISTICS & INTERGENERATIONAL TRANSFERS Not married Married Parent Cohort (Years of Birth) Percentile 1923 or Earlier 1924-1930 1931-1941 1942-1947 10th 0 0 0 0 25th $1,000 $1,000 $2,000 $3,000 50th $8,000 $8,000 $12,000 $19,000 75th $37,000 $42,000 $52,000 $65,000 90th $111,000 $111,000 $134,000 $187,000 95th $191,000 $195,000 $237,000 $382,000 Average Number of Children in Family 2.8 3.2 3.3 2.6 Average Inheritance Per Child $47,000 $45,000 $70,000 $86,000 (or “dissave”) in order to finance their own con- sumption in older age. The study resulted in three major conclusions. First, the distribution of bequests, like the dis- tribution of wealth, is highly skewed. The typical baby boom child of an older HRS respondent can expect only a modest inheritance, and approxi- mately 20 percent will not receive any bequest from their parents. The median bequest that children of HRS participants in the oldest cohort (born in 1923 or earlier) are likely to receive is about $8,000, while the median bequest that children of HRS participants born between 1942 and 1947 can expect to receive is $19,200. Second, there is considerable inequality in the estimates of expected bequests. Table 4-1 shows expected bequests from four different parent cohorts according to selected wealth percentiles. Among parents who were born between 1942 and 1947, those in the 10th percentile of wealth do not expect to leave any bequests to their children. Parents in the 25th percentile will leave relatively small bequests of approximately $3,000 per child. Parents in the 90th percentile, however, will leave $187,000 per child, and those in the 95th percentile will bequeath more than twice that amount ($382,000). The distribution of bequests reflects the highly skewed distribution of wealth mentioned in Chapter 3, as well as the tendency of the wealthy to have fewer children than those with lower wealth levels. Third, the study found very minor differences in the size of expected bequests for the two oldest parent cohorts (those born in 1930 or earlier), but an increasing magnitude of expected be- quests among younger parent cohorts. Based on proxy interviews about deceased HRS participants, the study also discovered that about 90 percent of financial inheritances are bequeathed to immediate family members. In interview is conducted with a knowledgeable proxy (often a surviving spouse or child) to obtain information about the last years of life and about the distribution of the estate. Thus, in a longitudi- nal setting, it becomes possible over time to see how well plans and expectations are carried out after death. To develop a new method for estimating the mag- nitude of future bequests, a group of researchers (Smith and Hurd 2002) combined HRS data on current wealth and self-reported probabilities of bequests with actual bequests (from proxy interviews for a sample of HRS participants who died between 1992 and 1998). The researchers were especially interested to learn whether ex- pected bequests differed greatly across cohorts, if bequests were distributed evenly among children, and the extent to which older households spend Amount of Bequests There is considerable controversy about the cur- rent and future importance of bequests in our society. Some argue that baby boomers are likely to receive large estates from their parents who have had relatively high lifetime incomes and have benefited from stock market gains. Others argue that the role of bequests in strengthening intergenerational relationships and contributing to future well-being of kin has been overstated. In order to understand the role of bequests, the HRS acquires two distinct types of information about them. From living respondents, it asks whether they themselves have received bequests, as well as their expectations to receive them in the future and to leave them to their own heirs. Following the death of a respondent, a special TBL. 4-1 Distribution of expected BEQUESTS, By parent cohort and selected wealth percentile (Dollars per child) Source: Smith and Hurd 2002.