There is a disconnect between younger generations expecting to inherit and parents balancing their own retirement lifestyle and needs, says Standard Life.
Nearly one in four (23%) Gen Z say they are not prioritising retirement saving because they expect to inherit money or property. A fifth (20%) of millennials said the same.
However, parents are increasingly reassessing what they plan to pass on, with 15% planning to prioritise enjoying their money and living for today over leaving an inheritance for their children or family.
This comes as upcoming policy changes continue to influence retirement spending decisions. From April 2027, unused pension funds will be brought into the scope of a person’s estate for inheritance tax purposes. Against this backdrop, nearly one in three (29%) parents say the changes will affect how they plan to use their pension in retirement. One in 10 say they are now more likely to spend their pension savings during retirement rather than leave them behind, while an additional 22% say they are now more likely to gift money during their lifetime instead.
Mike Ambery, retirement savings director at Standard Life, said: “Inheritance can play an important role in family finances, but it is risky for younger people to build their retirement plans around money or property they may never receive. At a time when many are dealing with higher living costs and financial pressures, it’s understandable that some may look to inheritance as part of the picture – but it’s far from guaranteed.
“With people living longer and later-life costs rising, many parents may understandably want or need to use more of their savings during retirement. With this in mind, inheritance should be seen as a possible bonus, rather than a substitute for building your own retirement pot.
“For Gen Z and millennials, the best approach to saving for retirement is to focus on what is in their control. Starting to contribute to a pension as early as possible, making the most of workplace pension schemes and increasing payments when your salary rises can all help savings benefit from long-term compound investment growth.”
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