Thursday, October 10, 2019

Your kids won't need an inheritance

There's been discussion over the past two days about taxing wealthy pensioners more to claw back their Super. More and more 65+ year-olds are continuing to work. According to Age Concern in 2013, 22% of New Zealanders over the age of 65 years were in paid employment. This is up from 16.8% in 2006 and 11.4% in 2001. I'd imagine many are already paying enough tax to cover their Super. Personally, I prefer simple regimes and, to reduce the Super bill, think the age of entitlement should rise as is the case in US, UK and Australia. The PM is resisting it.

But one point made by a spokesperson from Infometrics irked me:
"... if people are worried about passing on money to their children when they die, people's increasing life expectancies mean that inheritances are often being received by children when they are themselves retired and don't really need the money..."
Apart from the obvious, that it is the individual's business what he or she does with his or her money, this statement, as a generalization, makes a false assumption.

Yes, people are living longer but they are having children later. Consider this graph depicting the age of mothers:

Teenage births now match those of the over 40s. The next two most divergent age groups (20-24 and 35-39 years) have also merged and 30-34 has grown from being the 4th (in 1974) to 1st most common age for child-bearing. 

And that doesn't take into consideration the age of fathers. There are 44 years between my youngest and my husband and that's not terribly unusual.

Increasingly parents will reach their life expectancy (and hopefully go beyond) while their offspring are a long way from retirement.