To Gen Y: You Have Received the Better Part of Your Inheritance

I will surely ruffle a few feathers when I say that parents, especially parent-retirees are not required to leave an inheritance for their children. Sure, Proverbs 13:22 says “A good man leaves an inheritance for his children’s children…” But is inheritance limited to only material possessions? Of course not!

Dictionary.com defines inheritance in several ways. In one, inheritance is “something that is or may be inherited; property passing at the owner’s death to the heir or those entitled to succeed; legacy.” At the same time, inheritance may refer to “something as a quality, characteristic, or other immaterial possession, received from progenitors or predecessors as if by succession.” So it is clear that inheritance is not all about money or property. Nonmaterial things like knowledge, history, customs, traditions, faith, and laws are equally important when it comes to inheritance. Moreover, inheritance is not necessarily received only at the end of the predecessor’s life but throughout it as well.

Both formal and informal education freely and lovingly given to children is an integral part of inheritance. All parents want their children to have a better life and perhaps even surpass their own achievements. And it is in education, which nowadays comes at a hefty price, that children are trained to do just that. Education ensures that inheritance will indeed pass on not only to children but also to children’s children. That’s why I say to you Gen Y that you have already received the better part of your inheritance. Now if parents have anything left to pass on at the end of their life, these would just be “icing on the cake.”

There’s also a practical reason why parents should also not immediately divvy up their material possessions among their children, especially upon their retirement. The cost of retirement has gone up for two reasons: inflation and longer life expectancies. At PFA’s EnRich personal finance training programs, we tell parent-retirees to keep their material possessions first. The objective is not to spend it all on themselves but to wisely budget wealth throughout the three stages of retirement; the go-go years, the reflective years, and the care years. In addition, we harp on the need to shorten the go-go years and, whenever possible, lengthen the reflective years or period of simple yet meaningful living. A prolonged reflective period will allow wealth to still grow and pay for the expensive care years, the period where there is an accelerated dissipation of wealth and where children will themselves be financially challenged in starting their own families. Rather than be a financial burden to children, therefore parent-retirees should manage their wealth well and be self-supportive. And this is not being selfish at all.

If you want to know more about PFA’s unique EnRich personal finance training programs, visit www. personalfinance.ph, email info@personalfinance.ph, call (63-2) 216-1541 or SMS/call (63-917) 505-0709. Our website also has free personal finance tools and articles. You may also join our free personal finance discussion group at Income Tacts.

Efren Ll. Cruz is a registered financial planner with the RFPI USA . He is author of the bestselling books, “Pwede Na! The Complete Pinoy Guide to Personal Finance” and “Pwede Na! The Complete Pinoy Guide to Retirement & Estate Planning.” He is Chairman and CEO of Personal Finance Advisers Philippines Corporation. Questions about the article may be emailed to efren@personalfinance.ph. Efren may be reached at the same email address for the scheduling of consultations and personal finance seminars or at (+632- 216-1541 / +63917-505-0709). This article does not constitute nor forms part of any offer or solicitation of an offer to buy or sell any securities. The opinion and views expressed herein are solely those of the author’s and do not necessarily reflect those of the Personal Finance Advisers Philippines Corporation.