(Bloomberg Opinion) -- Bold retirees sport the bumper sticker “I am spending my children’s inheritance.” The sentiment might seem selfish, but it’s good financial planning.

Trying to leave a bequest could put older people in a tight spot. Finance author Chris Farrell once told me about a panicked 83-year-old woman with four kids who was on track to run out of money in three years because she was trying to save for her kids’ inheritance. She is not atypical.

Leaving a bequest can be especially hard for people who are widowed or divorced. Roughly, three-fourths of single elders express a desire to leave money to their kids. These households spend about 25% less on their own consumption.

This effort and anxiety may be misplaced. The truth is, most people don’t get an inheritance — only 22% of adult children born to parents without a college degree received an inheritance. For children of degree holders, that figure is only a little higher — 27%. And the median value was pretty small: parents without a college degree left $76,200 to their kids, while degree holders left $92,700.

The vast majority of Americans simply don’t have enough retirement wealth to maintain their pre-retirement standard of living in old age. Bequest planning is basically what the rich do: The top 1% of the households receive 35% of the value of all inheritances.

The recommended amount for most retirees is to sock away eight times your income in a retirement plan. If you earn $70,000 per year, you should have at least $420,000 in retirement accounts. But only the top 2% of households by lifetime income have actually saved this much. Although experts advise that many retirees would be better off annuitizing some of their wealth, wanting to leave money to their heirs bars them from making a financial decision that makes sense for them.

Adding home equity doesn’t make the picture look any rosier. Homeownership among their elderly is falling while and overall mortgage debt is increasing. Older Americans at the bottom third of the income distribution have only $77,000 in home equity, the top third has $180,000.

Most bequests are accidental — just what’s left over after a parent dies.

In planning for any possible bequest you want to leave, you need a pencil and paper and a little self-psychoanalysis. Make sure you have a budget and a barebones financial plan for retirement. Do you have enough retirement wealth to live the lifestyle you want, including visiting your adult children and giving them gifts?

Examine your motives for  wanting to leave a bequest. If the motive is love and care, think harder about ways to show it. Speaking as an economist who gets emails from adults panicked they will have to pay for their parents’ retirement, being financially independent is a great gift to your children. As Farnoosh Torabi and Erin Lowry suggest, endowing your children with an education, happy family memories and financial management skills could be a more lasting legacy than an inheritance.

If you don’t reverse mortgage or downsize, you can keep your home equity intact for insurance against long-term care. If it turns out you don’t need long-term care, your children may be happy to inherit the value of your home after you go.  

Most inheritances are accidental bequests composed of left-over retirement money and home equity. Without a viable national long-term care insurance program or secure pensions, planning to not leave a bequest makes sense for most Americans. The best financial plan would be to spend your last dollar on the day you die, but no one knows when that day will come and no one wants to outlive their money.

Given the fragile state of most Americans retirement accounts, the most likely situation is that older Americans will be relying on their adult children for financial help. If you can avoid putting that burden on your kids, you’ve done enough. Don’t worry about what you can’t leave behind.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Teresa Ghilarducci is the Schwartz Professor of Economics at the New School for Social Research. She's the co-author of "Rescuing Retirement" and a member of the board of directors of the Economic Policy Institute.

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