People in the over-50 age bracket are increasingly cutting back on essentials in their retirement in order to be able to leave a larger inheritance, research by Saga Money has found.
This is despite eight in 10 children saying they would rather their parents spent their savings enjoying retirement to the full.
The research found four in five parents were concerned about leaving an inheritance, with just under half of those surveyed suggesting they would not spend frivolously in retirement to ensure there was something left behind for their children.
Populus interviewed 2,004 adults aged 18 or more on behalf of Saga Money and found Londoners – at 63% – are the biggest believers that it is important to leave something behind for their children.
People living in the East Midlands meanwhile are the most reliant on receiving an inheritance, with one in five believing their financial future is dependant on receiving the money passed on from their parents, compared with one in seven nationally.
On the other side of the fence, a quarter of those over 50 said they planned to spend their savings to ensure they have a good retirement, rather than leaving it to their children. A third said they did not think they would have anything left to pass on, with women much more likely than their male counterparts to hold that belief.
Property tends to make up the biggest asset within an inheritance, the research found, with seven out of 10 parents saying the bulk of what they will leave to their children would come from their home, rising to three-quarters for those aged 50 or over. Almost half of parents said savings would also form a big chunk of their children’s inheritance.
Consider tax implications
Saga Equity Release Advice Service head Alex Edmans said people needed to think about the tax implications on the inheritance they planned to leave.
“With so many people planning to leave property to their children, it would be worth them considering whether to spend the money built up in their property first and leave their pension for the children to inherit – much more money can be passed on in pensions tax-free than from property,” she said.
“Four in 10 over-50s are deciding to give financial gifts to their family while they are still alive, by helping out with house deposits or wedding costs, enabling them to see the positive impact of their inheritance.
“Indeed, one in five people who take out equity release use some of the money to give to family, with the average gift being £31,100 – up from £29,000 in 2014.”
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