parent and grandparent

Over a third of people banking on inheritance to pay for retirement – study

A new survey has revealed 34% of people in the UK are banking on receiving an inheritance to fund their retirement.

What’s more, only 54% are confident enough to completely rule out needing an inheritance to fund their retirement, according to a survey of 2,000 adults conducted on behalf of Hargreaves Lansdown in May of this year.

The survey also found that two in five people either expect an inheritance or have already received one (38%). Additionally, the younger people are, the higher their expectations of inheriting money. However, only 29% of people plan to leave an inheritance, according to the study.

Sarah Coles, head of personal finance, Hargreaves Lansdown, said banking on an inheritance is a “dangerous mistake”.

“Life and relationships are far too complicated to stake our future financial security on. It means millions of people could be left high and dry if the plans of their loved ones change,” said Coles, continuing:

“It’s impossible to know what lies in store for our loved ones. They may decide to throw caution to the wind and spend their savings on the retirement they really want. They may need expensive care, which can devour an inheritance. They might change their mind about who they leave money to – especially if they start a new relationship.”

Vulnerable groups

Some people are particularly reliant on an inheritance to fund retirement – including women (37% compared to 32% of men). Coles says this may be because they tend to have less in their pension pots after taking time away from work for caring responsibilities and living with lower average wages.

The percentage of people who need an inheritance to fund retirement peaks in the “squeezed middle” years (35-54) at 41%. It’s said this includes the years where people are more likely to have a young family and “have seen the damage done to their retirement plans”. Many of them don’t feel they have time to play catch up with retirement savings, so think they’ll need an inheritance to close the gap, said Coles.

Higher earners are also more likely to be relying on an inheritance to fund retirement – 37% of higher rate taxpayers are, compared to 30% of basic rate taxpayers. It’s suggested this may be because higher earners have got used to a better standard of living – which isn’t going to be covered by their pension – so they realise they need another source of finance.

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