Inheritance trap could cost you $2m

By the Editorial Team · Friday, October 30, 2026

Many Australians in their 30s and 40s risk undermining their long-term wealth by delaying investment decisions while waiting for an inheritance, which typically arrives around age 50 and is often smaller than expected. Experts warn that starting to invest earlier, without relying on future inheritances, can generate significantly greater wealth through compounding returns and recommends treating inheritances as supplementary rather than foundational to financial planning.

For many people in their 30s and 40s, the prospect of receiving an inheritance from parents or relatives often lingers quietly in the background of financial planning. While inheritances can provide a significant financial boost when they eventually arrive, relying on this future windfall as a foundation for investment decisions can lead to costly consequences.

Recent research from the Productivity Commission highlights the potential pitfalls of counting on inheritance money. The average inheritance in Australia is approximately $125,000, but the median amount received is closer to $45,000—substantially lower than many anticipate. Moreover, inheritances tend to be received around the age of 50, often later than when such funds could deliver the greatest long-term benefit through investment growth.

Delaying investment decisions until receiving an inheritance could have a pronounced financial impact. For example, someone who starts investing at age 33—even without an inheritance—stands to accumulate significantly more wealth by age 60 compared to another individual who waits until 50, invests the average inheritance, and contributes monthly thereafter. Estimates suggest this delay can result in a shortfall exceeding $2 million, illustrating the opportunity cost of postponing independent investment in favor of an expected inheritance.

Experts note this pattern occurs because financial pressures in midlife—such as mortgages and raising children—make it tempting to defer additional investing. The expectation of future inheritance eases the immediate financial burden, leading many to postpone building their own savings. However, since uninvested funds earn no returns, the cumulative effect of waiting becomes evident later, often when individuals reassess their retirement goals and timelines.

Financial advisors recommend treating any expected inheritance as a welcome bonus rather than a central pillar of retirement planning. Approaching investment as though no inheritance will materialize allows individuals to harness the power of compounding returns earlier, setting a stronger foundation for financial security. Strategies such as automated, regular contributions to diversified investment vehicles, including index funds or superannuation salary sacrifice, can help establish consistent growth. While salary sacrificing into super may offer tax advantages, it also means funds are generally inaccessible until retirement, requiring careful planning.

In parallel, it is advised to have early and open conversations with parents or family members regarding estate intentions. Clarifying current wills, superannuation beneficiaries, and powers of attorney can provide a clearer picture of what to realistically expect and mitigate potential disputes or complications after inheritance occurs. Engaging professional estate advice may be warranted, especially when property or significant assets are involved.

Ultimately, individual investment action is the most controllable factor in shaping long-term financial outcomes. Counting on an inheritance carries inherent uncertainties in terms of timing and value. By prioritizing personal investment efforts early, any subsequent inheritance can accelerate plans rather than serving as their foundation. This approach aims to empower individuals to create financial resilience independent of factors beyond their control.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.