Millions of people could be making retirement plans based on inheritance assumptions without having conversations with their families first, a new study has revealed.
According to the Psychology of Retirement study from Moneybox, around 20% of UK adults expect to use inheritance to fund their retirement but, despite this plan, many have no knowledge of what that could look like or whether they will receive anything.
Among those expecting to receive an inheritance, fewer than half (46%) have broached this topic with their loved ones so are unsure what they might receive, and one in five (22%) admit they have never had the conversation at all but still assume they will inherit money in the future. This rises to a third (33%) of 35 to 54 year olds.
With those expecting an inheritance anticipating an average of £56,535, Moneybox warned this “assumption gap” could leave retirement plans in turmoil. A ‘moderate’ retirement requires £32,700 a year for a single person, meaning that losing out on this assumed inheritance could leave a shortfall of nearly two full years of a comfortable retirement fund.
The research also highlights a level of discomfort around inheritance conversations. One in seven (15%) say discussing inheritance feels awkward, while 12% believe it would be rude to raise the topic and 8% avoid the conversation altogether. More than one third (36%) of adults believe inheritance should never be relied upon when planning for retirement.
Brian Byrnes, director of personal finance at Moneybox, said: “Our research reveals millions could be facing an inheritance assumption gap. Quietly factoring future inheritance into retirement plans is not only risky but potentially devastating if fully relied upon.
“While inheritance may ultimately play a role for some families, it’s not something most people can predict or control and with social care costs also rising, an estate that looks substantial today could look very different in 10 or 20 years.
“Retirement planning is strongest when it’s built around the savings and investments you can influence yourself, rather than money that may arrive years down the line – or may not materialise in the way you expect.
“It’s understandable that conversations about inheritance can feel uncomfortable, but where families are able to have open discussions, it can help manage expectations and give everyone greater confidence when planning for the future.”
Main image: sean-sinclair-C_NJKfnTR5A-unsplash
