(MoneyWatch) "Fuhgeddaboutit"

If you're relying on an inheritance to fund your retirement, you might want to revise your plan. It's more likely all you're really going to get is a bunch of family stories, with some furniture, used cars, or jewelry thrown in for good measure -- certainly nothing you can take to the bank. At least that's the conclusion you get when you put two bits of information together: The results of a recent survey report from Allianz Life and an in-depth look at the wealth of the older population.

According to the Allianz report, 86 percent of boomers (those age 47 to 66) and 74 percent of elders (those age 72 and over) state that family stories are the most important aspect of their legacy, ahead of personal possessions (64 percent for boomers, 58 percent for elders). Financial assets, which you can take to the bank, are cited as most important by only 9 percent of boomers and 14 percent of elders. In addition, only 14 percent of elders feel they owe their children an inheritance, down from 22 percent who reported they felt this way in 2005.

These results make a lot of sense, given the modest retirement savings of most boomers and retirees. They'll need to use all their savings to avoid another unfortunate legacy -- the need to move in with their children because they've run out of money.

This leads us to the numbers I referred to earlier. According to the 2012 Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI), less than one-fourth -- only 22 percent -- of households headed by someone aged 55 and over have retirement savings of $250,000 or more. We can use numbers from my April 2012 retirement income scorecards to see just how much retirement income $250,000 in retirement savings will generate for a couple both age 65, using various methods of producing a retirement paycheck.

This couple could buy a fixed immediate annuity that would generate an annual payout rate of 5.8 percent, or $14,600 per year. They could also buy an inflation-adjusted annuity with an annual payout rate of 3.9 percent, or $9,688 per year. Add in Social Security income, and it's possible this couple will make ends meet in retirement, but they certainly won't be living high off the hog. And no financial legacy would be left if they used these methods of generating a retirement income.

Retirement income scorecard: Immediate annuities Retirement income scorecard: Managed payouts Retirement income scorecard: Interest and dividends

This couple could also use the four percent rule to generate retirement income: They would invest their savings, withdraw four percent in the first year, and give their retirement paycheck an increase for inflation each year. Their initial retirement income would be $10,000 per year.

This method offers pretty good odds of allowing your savings to last for the rest of your life, but the amount you could leave as a legacy would vary widely. If you live a long time or experience poor investment returns, you could experience "money death" before you pass away, and you'd leave no financial legacy. On the other hand, if you experience favorable investment returns or pass away before your estimated life expectancy, you could leave a substantial legacy.

One more thing: Given the current low interest rates on bonds and expectations for stock market returns, some analysts consider annual payout rates of 3.5 percent or lower to be safe if you don't want to outlive your money; a 3.5 percent payout rate would produce an annual income of $8,750 per year with $250,000 in retirement savings.

Read more from the original source:
Will an inheritance bail out your retirement?