Legacy vs. Liquidity: Why Experts Say You Should Spend Your Kids’ Inheritance Now

The Rise of the SKI Movement

There’s a new trend and acronym in town – SKI is “Spending the Kids’ Inheritance”. A recent episode on SBS Insight featured Victorians Leanne and Leon Ryland who shed light on the SKI ethos, and the Rylands have already spent more than $170,000 on travel, which quickly became a talking point worldwide. This isn’t just some isolated case of rebellious retirees thumbing their noses at tradition. TD Ameritrade’s Marriage and Money Survey found that 34% of Americans say leaving a legacy is not a priority at all, and 44% say they are likely or very likely to spend their savings on themselves.

Here’s the thing, though. About 25 percent of retirees decrease their spending, fearing they don’t have enough. They spent decades putting money aside, only to sit on it when they finally have the time to enjoy life. In one widely cited analysis, only about 14 percent of retirees actually spend their principal, with the majority living on income alone or even letting their nest egg balances grow.

The Great Inheritance Expectation Gap

Baby boomers are set to pass more than $68 trillion on to their children, and yet, some millennials and Generation Z may not be inheriting as much as they think, with recent reports showing a growing disconnect between how much the next generation expects to receive in the “great wealth transfer” and how much their aging parents plan on leaving them. To that point, 68% of millennials and Gen Zers have received or expect to receive an inheritance of nearly $320,000, on average, while 52% of millennials think they’ll get even more – at least $350,000 – but 55% of baby boomers who plan to leave behind an inheritance said they will pass on less than $250,000.

That’s a pretty serious mismatch between fantasy and reality, honestly. The study found that while 32% of millennials and 38% of Gen Z expect to receive an inheritance, only 22% of Gen X and baby boomers say they plan to leave one. Part of the discrepancy is because “parents are just not communicating well with their adult children about financial topics”, according to financial planning experts.

Healthcare Costs Are Devouring Retirement Funds

According to a report by insurance industry research firm Milliman, a healthy 65-year-old woman who retired in 2024 can expect to spend approximately $320,000 on her lifetime retirement health care costs, and a man of the same age could expect to spend about $281,000. Let that sink in for a moment. Milliman’s recently released 2024 Retiree Health Cost Index projects that a healthy 65-year-old couple can expect to spend upwards of $395,000 on healthcare costs in retirement, and in today’s dollars (assuming a 3% investment return), this reflects $395,000 in savings needed.

Health care inflation tends to outpace general inflation, and from 2000 to June 2024, medical care prices increased about 121% while all items rose around 86%, according to Consumer Price Index data. Tack on inflation, high health-care costs and longer life expectancies, and boomers suddenly may be feeling less secure about their financial standing – and less generous when it comes to giving money away.

Inheritance Often Arrives Too Late

Given joint life expectancies (last to die) for affluent people, most “kids” are age 55-65 when they inherit. Think about that. By the time your children finally receive what you’ve been saving for them, they’re often already established in their careers, past their peak earning years, and maybe already planning their own retirement. The most useful time in life to receive an inheritance is in your 20s, when you have precious little earning power, zero net worth (at best), and tons of expenses such as college, summers in Europe, missionary work, a first car, a down payment, a wedding, and a honeymoon.

Part of what’s happening is that people have a greater life expectancy, chipping away at their nest egg, with the elder generation living longer and by the time they are bequeathing assets at their death, they are in their eighties, nineties, or beyond, at which point their children could be well into their own retirement season of life, and the subsequent generation may be in reasonably stable financial situations.

Your Kids Probably Want You to Spend It Anyway

The couple’s own son, Alex, supported his parents’ lifestyle and said, “It’s their money. They’ve worked hard their entire life and invested well in order to get that money so I think they should be able to do whatever they’d like with it.” Most people are happy to see their parents having fun with their cash, according to Sun Life marketing director, Ian Atkinson, and the vast majority don’t see their parents as selfish simply for spending their own hard-earned cash, with just one in ten thinking their parents are having too much fun at their expense.

We’ve had several situations where it is the children who encourage the parents to spend more on themselves. I know it sounds crazy, but many adult children would rather see their parents living their best life now than receive a slightly larger check decades from now. You get to see family members benefit from and enjoy your generosity, and you can offer guidance and support in using the money.

Financial Independence Matters More Than Windfalls

The overwhelming majority of financially successful people are first-generation wealth builders, meaning they didn’t inherit their money but accumulated it from investing steadily, building a business, or both, and a study by global powerhouse Fidelity determined 88 percent of millionaires are self-made. A very large, no‑strings lump sum can undermine independence, resilience and pride, while skills, habits and character compound more reliably than windfalls.

Let’s be real here. Warren Buffet, one of the most successful investors in the world, famously said “Leave children enough so that they can do anything, but not enough that they can do nothing.” Leaving a large inheritance to your children may be more harmful than helpful.

The Retirement Spending Smile Curve

Retirement spending typically doesn’t march upward with inflation forever, and it tends to follow a “retirement spending smile”: higher and more discretionary in the “go‑go” years, lower in mid‑retirement as travel and big-ticket fun slow, with a modest uptick in later life for health or care needs. It is financially rational to do more of the memory‑making while you are most physically and mentally able.

According to the Sun Life survey, 61% of over 50s said they are enjoying life more now than they were when they were younger, with 20% taking up a new hobby, 12% learning a whole new skill and a huge 43% visiting a new country. There’s something deeply practical about spending your money while you can still climb mountains, explore new cities, and create memories.

Communication Is Everything

If you intend spending the kids’ inheritance, let them know now, and always work with an experienced financial advisor. The failure to create such a strategy is a major issue, with 90% of parents intending to leave an inheritance to their children but 48% not having a specific plan in place, making it important to map out how that money will be handed down.

Whatever you do, think how you want your own later years to look, and share your thoughts and plans with your family – particularly so your children are aware that receiving a large inheritance might not be a foregone conclusion. Nobody benefits from years of unspoken assumptions and eventual disappointment.

Strategic Spending Still Requires Planning

The importance of professional advice cannot be overstated because it helps to put a strategy in place (perhaps you can enjoy the fruit of your labour AND look after the kids?) A smart SKI plan is a rational, humane choice that aligns your money with your meaning, so book the trip, set the date with the grandkids, and build – then stick to – a decumulation plan that lets you enjoy it, guilt‑free.

Spending and security are not enemies, and a sound decumulation plan lets you do both. You shouldn’t just blow through your savings recklessly. The idea is to find balance between enjoying today and maintaining security for tomorrow, with professional guidance helping you determine exactly how much you can safely spend.

The Real Legacy You Leave Behind

While some of the spirit of ‘SKI’ is worthy of consideration, ultimately a balance of enjoying your retirement while still leaving your heirs something to help them along in life feels right for many. I also plan on leaving him a great deal of appreciation for the good fortune he was born with and the desire to do a little good in this world, which is the hard part, and perhaps the fun part.

You get to see family members benefit from and enjoy your generosity. Maybe the best inheritance isn’t a pile of cash delivered decades from now. Perhaps it’s the memories you create together, the values you demonstrate by living fully, and the occasional financial help you give exactly when it’s needed most. The golden rule for retirees helping family members: Don’t sacrifice your own financial security.

The SKI movement isn’t about selfishness or abandoning your children. It’s about recognizing that life is finite, that healthcare costs are exploding, and that your kids probably don’t need a massive windfall in their sixties as much as you need to live fully now. What do you think about it? Would you choose experiences over inheritance?