With the pension reforms just days away, the spotlight is on how people plan to spend their money in retirement and whether they will be able to make it last.
Research by Saga Personal Finance shows that people are not just focusing on themselves when it comes to retirement finances, parents strongly believe it is important to pass on an inheritance to their children and many plan to cut back to ensure they have something to pass on.
Children would rather parents spend the money on themselves
Children, however, are much less interested in an inheritance and would rather their parents spend their money enjoying their retirement.
Three quarters of people say they would rather their parents spent their money in retirement than leave them an inheritance, yet when it comes to parents only a quarter say they are not concerned about leaving an inheritance for their children, with the majority (81%) hoping that they can leave something.
Just under half believe so strongly in the importance of leaving an inheritance they say that they will not spend frivolously in retirement to ensure there is something left behind for their children.
It's important to discuss inheritance
Given these contrasting views it is important for people to discuss inheritance with their families openly and honestly, particularly if leaving an inheritance would mean that parents have to cut back.
Just a quarter of people over 50 say that they plan to spend their money ensuring they have a good retirement rather than leaving it to their children as an inheritance.
Read about inheritance tax.
A third say that they do not think they will have anything left to pass on.
How will you spend your money?
Alex Edmans, Head of Retirement, Saga Personal Finance, commented: “Inheritance can be an emotive issue, therefore, it is important for parents to discuss with their children, but they should not feel obliged to leave an inheritance.
“For those who would like to leave something behind they should realistically consider how best to use the money they have to make sure they have enough to fulfill their retirement goals and have something left for later life care, as well as what to leave for their children.”
How much money will you need in retirement? Read our article to find out.
Many 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.
Read our guide to the tax implications of giving money to children.
Equity release is being used to gift money
Indeed one in five people who take out equity release use some of the money to give to family, with the average gift being £29,000.
Jeff warns: “It is important for those considering releasing equity from their property to seek specialist advice and make sure they understand the impact this will have on their ability to leave further inheritance in the future.”
Many people are using equity release to secure themselves a comfortable and enjoyable retirement, presumably as their children would wish. Four in ten use some of the money for the holiday of a lifetime and 60% use the funds for home improvement, either to maintain or improve their home and sometimes to adapt it to ensure that they can remain in their own home for as long as possible.
Read about the home improvements that can add value to your property.