Research by the Resolution Foundation has found that while value of inheritances is set to double over the next 20 years, less than a third of people expect to receive an inheritance. This underlines the need for good financial and retirement planning, says Sarah Pennells, Consumer Finance Specialist at Royal London.
Figures from the Resolution Foundation show how important it is – whatever age – to build plans to pay for retirement rather than relying on an inheritance.
The research highlights that the average age at which 20-35-year-olds are projected to receive an inheritance is 61. Of course, there are many factors that influence wealth being passed down but if an inheritance doesn’t materialise or it’s less than expected, it leaves little time to try to make up the difference with retirement saving.
Many parents and grandparents want to help their family financially, but passing on money through an inheritance is unpredictable in terms of timing if nothing else.
Older people need to be mindful about not sacrificing their own standard of living in retirement for the next generation. It’s understandable that parents and grandparents may want to give their children or grandchildren a financial helping hand, but the possibility of funding future social care costs is an issue that looms large and may ultimately influence their decisions around when and how much to pass on.
While many people find it uncomfortable talking about inheritance, parents and grandparents who are in position to help their children or grandchildren should talk to an impartial financial adviser about the best way to do this, so they don’t unintentionally generate a tax bill or leave themselves short of funds in later life.
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