To me, to you... the inheritance generation gameThursday 2 April 2015
• Families urged to talk about inheritance • Parents planning to cut back in retirement in order to leave inheritance • Children would rather their parents enjoyed retirement and left nothing
To me, to you... the inheritance generation game
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. However, research by Saga Personal Finance, shows that people are not just focussing 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, 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.
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.
The research shows that half of parents believe it is important to leave an inheritance for their children, although this sentiment weakens with age, perhaps as the reality of our later life financial position hits home or because as children grow older we see they are less dependent on their parents for financial help.
Regionally it is the Scots who most believe it is important to leave something behind for their children (59%) and Londoners are the most dependent on receiving an inheritance - one in five says that their financial future is dependent on receiving money passed on from their parents, compared with one in ten people nationally.
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. And a third say that they do not think they will have anything left to pass on.
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 fulfil their retirement goals and have something left for later life care, as well as what to leave for their children.
“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. 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. Of course 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.
Notes to editors
* Populus interviewed 2,048 UK adults aged 18 and over, online between 26th and 27th November 2014. Populus is a member of the British Polling Council and abides by its rules.
About Saga Personal Finance
Saga Personal Finance offers a range of savings accounts, a share dealing service, a Saga-branded credit card, an equity release advice service for home owners over the age of 55, life insurance and annuity products, a care funding advisory service, and other financial products. Saga has over £5 billion of customer deposits in its savings accounts. As of 31 January 2014, Saga customers held approximately 67,000 wealth products.
About Equity Release
The Saga Equity Release Advice Service, provided by Just Retirement Solutions Limited (JRS) provides specialist advice and information for people considering using equity release.
- Every year the advice service helps thousands of people decide whether equity release is right for them
- An unbiased equity release specialist will see if there are other ways to raise money
- Our advisers will recommend people release only the amount they need
- Products are available from a range of carefully selected providers who are members of the Equity Release Council
- Any plan recommended will offer a 'no negative equity guarantee' ensuring that customers’ estates are not left owing more than their home is worth.
- Saga Personal Finance is a member of the Equity Release Council and abides by its rule
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