How Do Inheritances Affect the National Retirement Risk Index?

The brief’s key findings are:

• Taking away inheritances from households that have them reduces the NRRI by less than one percentage point.

• Inheritances could become more prevalent in the future due to unspent 401(k) balances, but increasing future inheritances has only a minimal effect.

• The reasons for the modest impact are:
  • the majority of households do not get an inheritance under either scenario;
  • for those who receive an inheritance, the amounts are relatively small; and
  • many with inheritances in the two scenarios are already well prepared, so either taking away or adding an inheritance does not put them “at risk.”

• If the analysis is limited only to households with inheritances, the impact on the percentage at risk is more substantial.