Boomers In Line For Big Pot Of Loot

Dec. 19–Tired of reading business and economic stories mentioning trillions of dollars, only to find that they refer to the latest budget deficit projection instead of a pot of money you might be able to tap?

Then this item from insurer MetLife may be the literature you’ve been looking for.

A new study done for MetLife’sMature Market Institute estimates Baby Boomers stand to inherit $8.4 trillion from their parents, grandparents and others. Boomers already have received $2.4 trillion, or roughly 25 percent, of their bequest. That leaves an estimated $6 trillion yet to come their way, according to the study.

Parents have accounted for 63 percent of the inheritances and 74 percent of the dollars turned over so far. Grandparents of Boomers were the second-biggest source.

MetLife commissioned Boston College’s Center for Retirement Research to do the report.

According to its research, about two-thirds of Boomer households will receive some inheritance with the median amount being $64,000. That means half of them will receive more than that and half will receive less.

The average inheritance varies widely based on a Boomer’s income. Those in the top 10 percent will receive an average inheritance of $1.5 million while those in the bottom 10 percent will only get $27,000, the researchers estimated. But the bequests will have a larger impact on the less financially endowed than they will on the wealthy, the study concluded.

The estimates are based on 2007 data, so they don’t measure the impact of the housing and financial crises on how much the Boomers’ parents and grandparents have left to turn over. Boston College’s researchers estimated that if inheritances fell in tandem with home prices and Wall Street, the $6 trillion yet to be turned may be more like a mere $5.2 trillion.

Whatever the amount, MetLife cautions Baby Boomers not to count their trillions just yet.

Sandra Timmerman , director of its Mature Market Institute, said they could inherit less because their benefactors may live longer than expected, have their wealth reduced by medical and long-term care costs, or have less to entrust to the next generation because of poorly performing financial markets.

Not to mention the likelihood a Boomer will be disinherited for behaving badly.

“Boomer households should not count on anticipated inheritance and forgo the need for increased financial planning and retirement saving,” Ms. Timmerman said.

Alicia H. Munnell , co-author of the study and director of Boston College’s retirement research program, said the inheritances won’t be “a silver bullet” for Baby Boomers’ retirement years. She believes the findings present a good opportunity to discuss the sometimes uncomfortable topic of estate planning, preferably with a financial advisor family members trust.

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Anyone who thinks the froth has gone out of the stock market might want to see what was on tap at the Boston Beer Co. [ticker: SAM] last week.

Shares of the brewer of Sam Adams rose 12 percent Wednesday after the company elevated its earnings outlook, forecasting earnings per share of $3.30 to $3.60 this year vs. its prior profit outlook of $2.85 to $3.15 per share. The company, which says it accounts for less than 1 percent of the U.S. beer market, now expects to earn $3.95 per share in 2011.

In its formative years, Sam Adams was brewed under contracts with brewers who were looking to fill up their plants, including then Pittsburgh Brewing in Lawrenceville. Currently, Boston Beer produces more than 95 percent of its suds at its own breweries, which are in Boston, Lehigh County and Cincinnati. It paid $55 million for the Lehigh brewery in 2008 and has invested more than $56 million in the plant since then, according to the company’s Securities and Exchange Commission filings.

Last week’s action continued a good run for Boston Beer shares. Two months ago, they were fetching around $70. Since mid-October, they are up 40 percent vs. a 4 percent rise for Molson Coors [TAP] and a 9 percent slide for Anheuser-Busch InBev [BUD]. Boston Beer’s performance is seven times better than the S&P 500’s over the same time period.

Earnings fueled the first leg of Boston Beer’s climb. Shares jumped 11 percent Nov. 5 after the company said third quarter profits rose 49 percent to $15.4 million, or $1.09 per share. Earnings for the first nine months of the year were up 61 percent to $38 million, or $2.65 per share.

Boston Beer finished the week at $96.06, up $11.57, or 14 percent for the week. That prices them at 24 times the brewer’s 2011 forecasted earnings.

Len Boselovic : lboselovic@post-gazette.com or 412-263-1941.

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