Millennials are relying on an inheritance that may never arrive, new research from Alliance Witan shows.
According to the investment trust, almost half (48%) of millennials say that an inheritance is important to them achieving their financial goals, rising to 55% of Gen Z. Furthermore, 51% of parents with children under 18 say receiving or expecting an inheritance is important to fulfilling their financial ambitions.
However, the research uncovered a disconnect between expectations and older generations’ retirement plans.
Only 15% of UK adults, and just 10% of those over-55, say they will prioritise leaving wealth if it means cutting their own retirement spending. Nearly a third (32%) of over-55s plan to balance spending with leaving a legacy, while 16% will prioritise enjoying their retirement even if it means leaving less behind.
Yet, despite the uncertainty, Alliance Witan said few Brits are taking active measures to achieve their goals and build their own financial resilience. Just one in six (16%) UK adults and 20% of millennials are currently investing in the stock market to achieve their goals.
Instead, millennials are aiming to build wealth by saving money in cash accounts (32%), reducing spending or shopping in cheaper places (31%), aiming to increase their salary (20%), cutting back on holidays (17%), or living somewhere cheaper (15%).
Mark Atkinson, managing director at Willis Towers Watson, which manages Alliance Witan, said: “The reality of modern retirement is changing, with people living longer and the cost of later life increasing. With pensions soon falling into Inheritance Tax estates, anticipated family windfalls become even less certain which can threaten financial goals.
“So while it’s understandable that people hope for a financial helping hand from their families to reach major life milestones, there’s a huge risk in relying on this to achieve financial goals.
“Regardless of whether there’s a future inheritance, it’s sensible to plan for a self-sufficient financial future. That means building up a rainy day cash pot but also putting aside money for investment that can grow over the long term.”
Main image: mahdi-8Sa3qfovv2c-unsplash
