This year’s retirees don’t think they’ll be able to leave an inheritance
Only 28% of those retiring this year think they will be able to afford to leave an inheritance – the lowest level in six years compared with 52% recorded back in 2011.
This is despite recent changes to rules around inheritance tax and passing on pension pots.
The research from Prudential as part of its ‘Class of 2016’ study which looks at the financial plans and aspirations of people planning to retire in the year ahead, shows a sharp fall in the proportion of people being able to leave a legacy.
It found that more than a third are already helping family with ongoing support averaging £250 per month, or £60,000 over retirement. However, 13% pay more than £500 per month to their relatives.
They are most likely to support their children and/or their children’s partners (81%), however, 15% are still providing financial support to their own parents and one in 20 are paying out money to support their grandparents.
Prudential research showed that a generous 7% have provided a deposit for a house for a family member, and 6% are helping to cover the cost of university education.
But the financial pressure means 23% plan to take paid employment in retirement and nearly a quarter plan to sell the family home to boost their income.
Of those who believe they will be able to leave an inheritance, they expect to leave £191,000, a figure virtually unchanged from the previous year.
Stan Russell, a retirement income expert at Prudential, said: “With the average retirement now lasting nearly 20 years, people retiring in 2016 who provide support to their families could hand over an average of £60,000 during their retirement. With this in mind it is perhaps unsurprising that the numbers of people expecting to leave an inheritance is on the decline.
“The pressure on retirees to provide this financial support continues to rise in line with the growth in the cost of housing, education, childcare and support for older people. In fact, these research results show that the concept of the ‘bank of mum and dad’ is already out of date – many of this year’s retirees must feel like the bank of son, daughter, grandson, granddaughter, partner, granny and grandad, all rolled into one.”