My wife and I have worked over 40 years and want to enjoy our retirement — but we feel guilty. Should we spend our kids’ inheritance or make sure our children have enough?

The case for putting yourself first

The primary reason you shouldn’t feel bad about spending your savings in retirement is that it’s your money, plain and simple. Your kids didn’t spend years cutting corners and working long hours to build up your IRA or 401(k). You did. So you have every right to use that money as you see fit.

Also, you may have given up many goals in the course of being a parent. If you didn’t travel much when you had kids at home and a full-time job, now’s your opportunity. And chances are, your adult children would want you to spend your money on things that make you happy.

Furthermore, you might end up with expenses in retirement you don’t anticipate.

Before you can even think of distributing money to your kids or carving out funds for an early inheritance, you’ll need to make sure you have enough money set aside for your own needs. Think about financial surprises you might encounter. You’ll want to maintain a strong emergency fund in case your home ends up needing repairs or you need a new vehicle to get around.

And don’t forget long-term care. The median monthly cost to reside in an assisted living facility is $5,350, according to Genworth's most recent Cost of Care Survey. For a home health aide, that figure rises to $6,292.

A good 63% of Americans worry more about outliving their savings than actual death, according to a 2024 survey by Allianz Life Insurance Company.

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The case for prioritizing your kids

Being a parent isn’t a temporary job. Even once your kids have children of their own, you might still feel responsible for their financial wellbeing, and that’s understandable.

Leaving behind an inheritance could also serve as a source of pride and joy for you – so much so that you’re willing to sacrifice certain elements of your retirement to make that possible. Plus, if you make it a goal to leave behind an inheritance, it might actually help you manage your savings more savvily.

Your kids may also really need the help.

A University of Cambridge study found that American millennials were statistically more likely to work in low-paid service jobs or live with their parents as they entered middle age than baby boomers. By age 35, 17% of boomers had followed a path in which they progressed from college into prestigious professional careers like law and medicine, whereas only 7.3% of millennials did the same. While 62% of boomers owned homes at 35, only 49% of millennials did. Around 14% of millennials had negative net worth, meaning their debts outweighed their assets, compared with 8.7% of boomers.

You can do both

Enjoying retirement and leaving behind an inheritance don’t have to be mutually exclusive. With the right planning, you can live your senior years to the fullest while also reserving funds for your loved ones. An initial step in the process is to sit down with a financial adviser and discuss these goals. They can help you assess your financial picture and make a plan to both spend your wealth and pass some on.

Certain accounts, for example, give you more flexibility, like a Roth IRA or 401(k). Roth IRAs — and starting in 2024, Roth 401(k)s — don’t impose required minimum distributions like traditional IRAs and 401(k)s do. You can work with a financial adviser to come up with an annual withdrawal rate that gives you access to the money you need to meet your goals while leaving ample funds left.

"In most instances, it’s most beneficial for your children to inherit a Roth IRA," says Patrick Hicks, Head of Legal at online estate planning company Trust & Will. "This is because you already paid the taxes on your contributions, meaning that they don’t have to worry about paying any income tax when they inherit and liquidate your account."

Your adviser might also suggest that you work with an estate-planning attorney to set up a living trust. A living trust is a legal arrangement that allows you to pass on assets that don’t have to be subject to probate, which is the often costly and time-consuming process of proving a will’s legitimacy in court. The nice thing about a living trust is that you maintain control over your assets during your lifetime.