The Inheritance Illusion: Why Most Americans Won’t Strike it Rich After a Loved One Passes
For many, the thought of an inheritance is a shimmering beacon, a potential solution to financial woes, or a jumpstart on future goals. The prospect of receiving wealth from a departed parent, grandparent, or wealthy relative can fuel dreams of early retirement, debt freedom, or finally starting that long-desired business. However, the cold reality is that most Americans will never experience this windfall. The notion of effortless wealth transfer is largely an illusion, a promise whispered more often than fulfilled.
According to various studies and analyses, the inheritance lottery is far from universally accessible. While it’s true that inheritances can significantly impact the lives of millions, particularly those who are older, white, college-educated, and already relatively wealthy, the vast majority of Americans are unlikely to inherit anything of substantial value.
The stark figures paint a clear picture. Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies (IPS), emphasizes that "most households will pass on little or no inheritance to the next generation." Data supports this claim. A 2022 analysis by the Federal Reserve Bank of Richmond revealed that only around 30% of older Americans (ages 47 to 70) have ever received an inheritance or any other form of intergenerational wealth transfer. The numbers dwindle even further when considering younger adults, with less than 20% having experienced an inheritance. By the age of 75, a Washington Post report notes that roughly two-fifths of Americans have received an inheritance.
Michael Neal, a senior fellow at the Urban Institute, succinctly summarizes the situation: "That means the typical family is not leaving an inheritance."
The likelihood of inheriting isn’t uniform across all age groups either. The window of opportunity tends to be concentrated between the ages of 56 and 65, according to a 2021 analysis from the Wharton School of the University of Pennsylvania. Americans in the 46-55 age bracket are the next most likely to inherit. These findings are drawn from the federal Survey of Consumer Finances, a comprehensive study conducted every three years, providing a robust dataset for analyzing wealth distribution.
For those fortunate enough to inherit, the average sum, as of 2022, is approximately $266,000, according to the Washington Post. While this amount is significant, it’s crucial to remember that this is an average, meaning the actual sums received vary greatly depending on individual circumstances.
A Glimmer of Hope? The Increasing Prevalence of Inheritance
Despite the sobering statistics, there’s a faint glimmer of hope for those aspiring to inherit. According to Kent Smetters, a Wharton professor actively involved in inheritance research, inheritances are becoming more common. "Simply put, there are more people aging into prime inheritance age over time," he explains. As the population ages and previous generations accumulate wealth, the potential for wealth transfer increases. However, this doesn’t necessarily translate into a widespread distribution of wealth, but rather a concentration among specific demographic groups.
The Unequal Inheritance Landscape
The likelihood of inheriting, and the amount received, is heavily influenced by factors such as age, race, education, and existing wealth. Disparities across racial lines are particularly pronounced. The Richmond Fed reports that 35% of white households have received an inheritance, compared to only 13% of Black households among older Americans. Moreover, the average inheritance amount differs significantly, with Black recipients averaging $154,260 compared to $303,100 for white recipients.
"In aggregate, there just tends to be less transferred to Black families," explains Neal, highlighting the systemic inequalities that perpetuate the racial wealth gap. Research from the Center for Retirement Research at Boston College suggests that a lower prevalence of wills among Black Americans contributes to this disparity.
Gal Wettstein, a senior economist at the research center, underscores the enduring nature of the problem: "The racial wealth gap has proven to be a persistent problem."
Educational attainment also plays a significant role. The Richmond Fed indicates that wealth transfers reach approximately 22% of older Americans with only a high school degree. This figure rises to 39% for college graduates, demonstrating the correlation between education and access to inherited wealth.
The Desire to Leave a Legacy: A Disconnect from Reality
Despite the unlikelihood of many Americans receiving inheritances, a significant portion harbors the desire to leave something behind for their heirs. A 2023 study by the Urban Institute reveals that roughly three-fifths of Americans hope to pass a sizable estate to their children or other beneficiaries. This aspiration is shared across racial lines, with similar expectations among both white and Black families.
However, the realities of life often impede these intentions. Researchers point to several contributing factors. Inadequate financial planning can prevent families from accumulating a significant estate. The high cost of long-term care can deplete assets, leaving little to pass on. Furthermore, the lack of homeownership, a crucial step in building wealth, can limit the potential for wealth transfer.
As Neal succinctly puts it, "You can’t pass the wealth off if you don’t have the wealth in the first place."
The Paradox of Inheritance: Wealth Concentrates Wealth
Adding to the complexities, those with high incomes are disproportionately likely to inherit larger sums. Wharton researchers found that the median inheritance across all incomes in 2019 dollars was $12,353. However, for households in the top 5% of income earners, the median inheritance rises to $51,499. This demonstrates a pattern where existing wealth often begets more wealth through inheritance, further exacerbating income inequality.
The Estate Tax Landscape: Shifting the Goalposts
Recent changes to estate tax laws have further contributed to the concentration of wealth. Prior to 2008, estates as small as $2 million were subject to estate taxes, according to the Tax Foundation. By 2017, the threshold had risen to approximately $5.5 million. The 2017 Tax Cuts and Jobs Act, enacted under President Donald Trump, doubled the non-taxable limit to $11.2 million. As of 2025, the threshold stands at nearly $14 million.
These changes have resulted in fewer wealthy Americans paying estate taxes. The nonpartisan Tax Policy Center reports that the number of returns subject to estate taxes dropped from 15,100 in 2008 to a mere 4,000 in 2023.
Chuck Collins of IPS warns that this trend "will only accelerate existing wealth disparities, including the racial wealth divide." By reducing the tax burden on large estates, these policy changes effectively allow for greater accumulation and transfer of wealth within already affluent families, further widening the gap between the haves and have-nots.
In conclusion, while the allure of inheritance remains a powerful force, the statistical realities paint a far less optimistic picture for the majority of Americans. Factors such as race, education, and pre-existing wealth significantly influence the likelihood of inheriting and the amount received. Moreover, shifts in estate tax policies are further concentrating wealth at the top. Therefore, relying solely on the prospect of inheritance as a path to financial security is a risky proposition. A more prudent approach involves proactive financial planning, strategic investment, and a realistic understanding of the inheritance landscape.
