Americans Count on Inheritance as Savings Gap Grows, but Family Homes Add Complications

Americans are counting on inheritance to fund retirement and maintain wealth, a trend economists describe as the Great Wealth Transfer. Over the next 25 years, economists project more than $100 trillion of wealth will pass from the baby boom generation to their children. But a new set of surveys and real-world cases suggests that this strategy is fragile, particularly when a substantial portion of that wealth is tied up in family homes. A Choice Mutual survey found that 66% of Americans expect—or have already received—an inheritance, a figure that underscores how many households plan to lean on family wealth rather than saving on their own. At the same time, rising health care costs and other aging-related expenses are compressing what families can pass down, even when real estate holds substantial equity.

On average, younger Americans expect to inherit about $335,000 from their parents, with about 8% anticipating $1 million or more, according to the Choice Mutual survey. Those expectations reflect the scale of the potential transfers but also acknowledge that inheritances can be smaller, delayed, or even contested. Inflation is widening costs that retirees face, which can erode their savings and leave less for heirs when the time comes. “Unfortunately, due to increased inflation, costs are rising dramatically,” said Craig Kirsner, a retirement planner and author. “These rising costs are hitting retirees the hardest as they aren’t working anymore and typically have a fixed amount of income that often doesn’t grow as fast as inflation.”

The reality of balancing aging needs with legacy plans has played out in individual cases. Real-estate agent and foreclosure investor Jessica Vance recently encountered a home that went to auction because the family could not afford long-term care for their father. Despite meaningful equity, keeping the home would have required exhausting that value to cover medical bills. By letting it go, the state shouldered the cost of care, but the family lost the home and, with it, the inheritance. Experts say this illustrates a broader truth: debt and care costs can eat into or erase what is expected to pass to heirs. “As a retirement planner, I always say to my clients that I want them to live their best lives. I’m not worried about their children’s inheritance,” said Craig Kirsner. “While it’s nice to leave assets to your family, if it comes as a sacrifice to my retired clients’ well-being, that doesn’t make sense to me.”

One of the biggest threats to real estate inheritances, experts say, is debt. An increasing share of retirees carry mortgages or other liens, and a home can become collateral that drains the estate. Tyler Livingston, an estate-planning attorney, notes that debt may be necessary to maintain a retiree’s quality of life, but it can leave little for heirs if obligations remain unresolved at death. “If a property owner passes away with significant mortgages, home equity loans, or unpaid taxes, those obligations must be settled before heirs receive anything,” he said. Debt is rising among retirees, nearly doubling from 1992 to 2022, according to research from AARP, underscoring how readily a home can become a liability even when it represents the family’s largest asset.

Beyond debt, probate and tangled titles can siphon off value. Without a trust or a transfer-on-death deed, properties may pass through probate, a process that can entail months of delays, court fees, and disputes among heirs. Even when debt isn’t an issue,holders of title may find that ownership documents are not clear, leading to costly legal fights that reduce the eventual inheritance. Property taxes and ongoing upkeep further complicate the math. Property taxes, insurance, and maintenance can run thousands of dollars each year, and in high-value markets taxes alone can force families to sell to avoid eroding legacy wealth. Livingston emphasizes that rising property values can create large, hidden tax burdens that heirs must handle. “Property taxes are perhaps the most significant hidden threats,” he said. “In areas with rising values, heirs may inherit a property that is worth quite a lot, but it comes with a significant tax burden. They may be forced to sell if they can’t afford that tax burden.”

Even when debt and legal hurdles aren’t an issue, a lack of planning can convert an inheritance into a costly surprise. Only 24% of U.S. adults report having a will, according to Caring.com, though the figure rises with age: a 2024 AARP study shows the share nearly doubles among those aged 50 and older. Experts say the best safeguard is to begin with proper paperwork—an up-to-date will, a trust, and accurate property titles to avoid probate disputes or tangled ownership. Families should also plan for long-term care costs, either by earmarking savings or purchasing insurance to prevent medical bills from draining home equity. Equally important is open communication: discussing money, health care, and inheritance expectations early can prevent conflict or surprises later on. Attorneys, CPAs, and financial planners can help families craft a strategy that holds up when it matters most. “Most importantly, families shouldn’t assume an inheritance will take care of their financial future. Proactive saving and intentional estate planning are the best safeguards for both generations,” Livingston said. An inheritance can be a gift, but it shouldn’t be anyone’s financial plan. Counting on one is risky, especially when rising health care costs, debt, and taxes can shrink or erase what’s left behind. The only way to stay secure is to save and invest on your own, and view any inheritance as an unexpected bonus rather than a guarantee.