What the Inheritance Study Really Measured
A friend sent them an article that said 42% of heirs spend an entire inheritance within a year.
Picture a couple named Chester, 70, and Beverly, 68. A friend sent them an article that said 42% of heirs spend an entire inheritance within a year. The article added that heirs spend inherited money faster than lottery winners.
Beverly put down her coffee. "Is that what our children would do?"
Chester looked up the study. It was published in March 2026 in the journal Financial Services Review, by Thompson and James. He read what it measured, and he told Beverly what he found.
| What the article said | What the study reported |
|---|---|
| 42% of heirs spent it all | About 42% of heirs aged 50 and older ended with no more net worth at the next survey than before the inheritance |
| "Most heirs" spend everything | About 43% saved all of it. About 15% did a mix |
| Heirs spend faster than other windfalls | People who received other windfalls, such as lawsuit or insurance payments, acted almost the same. 44% ended with no more net worth, and 44% saved all of it |
| The money was spent | The study looked at net worth, not purchases. Paying off a debt would not show up as spending |
The study drew on the Health and Retirement Study, which asks older Americans about their finances every two years. It covered 3,005 inheritances received between 2010 and 2018. The average was about US$133,000.
After the authors adjusted for the size of the windfall and the person's background, inheritors had 24% higher odds of ending with no more net worth than people who received other windfalls. The authors suggest one reason may be the reminder of death that comes with an inheritance. They did not test that idea. They say so, and they add that many of the amounts in the data were estimated.
So the number is real, and the picture is not the one the article painted. The study found that heirs split almost evenly between spending it all and saving it all, which does not support the idea that most heirs spend everything.
"What does that tell us?" Beverly asked.
"That we do not know our own children's answer from a statistic," Chester said. "We could ask them."
You could…
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Read the study's summary yourself. It is free on the journal's website.
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Decide what you would want an inheritance to do for each child.
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Ask your children how they would use a gift, before any gift is made.
What did you take from the 42%? Share it here. Someone reading may have heard it as a headline and not as a study.
Figures are estimates for planning, based on public data. Source: Thompson and James, "Dissipation of inheritance windfalls and the case for time-phased transfers," Financial Services Review 34(1), 2026.
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