There's both good and bad news when it comes to Americans planning for retirement.
The good news is more than three-quarters of Americans think their retirement is up to them, not the government. The bad news — most seem to be expecting an inheritance to fund that retirement.
"Counting on inheritance from family is exceptionally risky for any generation," said Jeff Weeks, a financial advisor at Wells Fargo Advisors. "Money that may be set aside today could be needed for unplanned expenses. I recommend that people approach inheritance as an added bonus, not a guarantee."
New numbers released by Natixis Global Asset Management seem to show many are not heeding that advice. While 78% of Americans say it is up to them to make sure they have enough money to live in retirement — not the government — 77% are counting on family support to help fund their retirement. Millennials, in particular, seem to be counting on a windfall from a will, as 62% believe an inheritance and support from their children will be important for their retirement needs.
"Many Millennials may think that their parents are prioritizing leaving them money after their gone, but this is not always the case," Weeks said. "Not all investors are interested in flying coach so their children can fly first-class. They want to enjoy the wealth they have earned. If there's money left over then great, if there's not, that's fine too. It was theirs to spend."
Pearce Landry-Wegener, an advisor at Summit Place Financial Advisors, said relying on an inheritance to fund a retirement can be risky at best.
"Often, families don't discuss their financial situation," Landry-Wegener said. "Parents don't clarify whether they planned for their kids' inheritance, and kids never ask. That's why - especially if a family is accustomed to a certain lifestyle - it's critical to sit down and discuss money."
Landry-Wegener said instead of waiting for an inheritance, Millennials — at a minimum — should be saving 10% of their salary to prepare for retirement and matching their employer's retirement contribution.
"All in all, they should proactively build their retirement accounts completely independent of their future inheritance," he said.
Bob Johnson, president of The American College of Financial Services, said while waiting on an inheritance is not a retirement plan, there's no denying many people are operating as if it is their plan. What Americans should be doing — especially Millennials — is taking advantage of what they already have — time.
Younger investors have the benefit of a long time horizon," Johnson said. "Time is the greatest ally of the investor, as time allows for compounding."
Johnson said he also is amazed at the number of people who don't participate in employer matching plans.
"They are effectively turning down free money," he said. "This is akin to turning down a raise. Some are concentrating on paying down student loans in lieu of participating in retirement plans. While paying down student debt is laudable, it is much wiser to pay down that debt slower and participate in an employer sponsored retirement plan with a matching component."
And while Millennials should not risk their retirement on an inheritance that may or may not come, they should take more risks — and embrace the equity markets.
"Early in one's working life, the biggest mistake people make is to take too little risk," Johnson said. "Young people have the ability to bear risk because they have a long time horizon. But, often they don't have the willingness to bear risk because of a fear of market downturns."
Research done by UBS shows that Millennials and the WWII generation have about the same degree of risk tolerance - both are very conservative, Johnson said. This can be explained by the fact that the WWII generation and Millennials were both shaped by cataclysmic financial events - the WWII generation by the Great Depression and Millennials by the financial crisis.
"Young investors should take more prudent risk in their portfolios," he said.