Posted by: Daryl & Wendy Ashby | March 1, 2010

Now They Tell Me

Some years ago, large numbers of retirees started SKIing. They weren’t necessarily taking to the slopes in their snowsuits though. This particular form of SKIing was all about Spending the Kids Inheritance, using their hard-earned savings to have the time of their lives in the destination of their dreams.

It all started off as a bit of a joke, a cheeky mantra for a new generation of live-for-the-moment retirees. Now, increasing numbers are finding themselves SKIing out of necessity rather than for fun. Having tallied up assets and liabilities, they may even find themselves still at work. Suddenly, it feels a little chilly out on the slopes.

SKIing is now firmly entrenched in our culture, even if its character has already changed in its short existence. It’s a massive cultural shift from previous generations who would have been more inclined to sacrifice everything for their kids, says David Cravit, vice-president of ZoomerMedia group in Toronto and author of The New Old: How the Boomers Are Changing Everything… Again.

Increased longevity and the recent downturn make it even less likely that there will be anything left for the kids.

“The pressure on Baby Boomers to leave behind a big estate is now zero,” says Mr. Cravit. “The average Boomer is now saying, ‘I need every dime I have. I can’t put money in a sock under the mattress,’ ” he adds.

The major game changer is longevity. “All our previous beliefs about pensions and inheritance are fading away,” Mr. Cravit says.

Stephen Pollan in New York knows the SKIing phenomenon well. Back in the late 1990s, he urged the elderly to spend, spend, spend in his controversial book Die Broke. It was very popular among snowbirds living in Florida, he says. It gave them a reason to avoid the “earlybird” meal, served before 4 p.m. at half-price. Dying broke is a freeing thing, he says.

Today, he says retirement has become a “total nonevent.” But, that’s not necessarily bad.

“Leisure has been discovered to be lethal and activity has been discovered to be a life extender,” Mr. Pollan says. He advises people to work later, to enjoy their money and to help out their kids while they’re still alive.

“There’s no reason to leave an estate. What are you gonna leave for a 60 year old?” he asks.

Dying broke is still the way forward, according to Mr. Pollan.

Today, it’s the natural course of events for most people. Those who are struggling with ravaged pensions, slumping home values, health-care costs or debt repayments have no choice.

But even those with a choice see a real advantage to it. “Large estates used to have an aura of respect and dignity. Today, the bigger the estate, the more you look like an a–hole,” he says.

It’s slightly ironic to think that many Baby Boomers may have been banking on an inheritance from their own parents for their SKIing trip. In his 25 years of estate planning, Ken McNaughton at ZLC Financial Group in Victoria, has seen it all. Talk of the “trillion-dollar wealth transfer,” supposedly set to flow from seniors to Baby Boomer accounts over the coming decades, makes him wince.

“It’s almost as though [we] will have done all things right if we have safely shepherded the money from mom’s bank account to the accounts of the grieving but grateful Boomers, who really need it now that the recession has wiped out so much of their personal net worth.”

Mr. McNaughton says he’s had people phone him up “under the guise of concerned children” to find out what might be left for them. “It’s often something that they don’t want to admit, that they want that information,” he says. “I’m really concerned about the person sitting across the table, the senior. I’m not really interested in seeing them living off nothing to pass on money to younger generations.”

Many Boomers looking after parents in their 80s and 90s are getting a sneak preview of what lies ahead for generations X and Y (now in their 20s, 30s and early 40s). For these younger generations, there is simply no sense in expecting parents to scrimp and save for their inheritance, Mr. Cravit says.

There may be the realization among youngsters that, should parents not have enough money for health-care needs over their extended lifetimes, they will end up paying anyway, he says.

He believes that the Boomers have been unfairly labelled. SKIing is not hedonistic or selfish, but pragmatic, he says.

“The Boomers were very responsible parents, very good to their kids. They have not been neglectful. If anything, they’ve spoiled their kids.”

He hopes that the concept of inheritance will evolve into something more enlightened over time. Boomers can make a virtue out of necessity, he says.

“We’re going to see a much more thoughtful, spiritual, cerebral form of inheritance. Maybe it’s a trip we’re going to take that doesn’t involve fine wine and hotels, maybe it’s about writing a family history.”

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