The younger generation will have to fend for themselves in the future, a new report suggests, as the elder generation becomes less concerned about passing on an inheritance to their offspring.
Over 70% of retirees are not anticipating leaving an inheritance for their offspring, according to the 25UP report, while almost half expect their remaining money to go towards care bills in their last years.
This may be difficult news for the following generations, as around a fifth of young and middle-aged folk have been banking on a sizeable inheritance in the future.
Younger generations counting on an inheritance windfall may be in for a shock, a new report suggests.
The report commissioned by Sanlam Private Investments identifies changing attitudes to money over three life stages: mid-20s, middle age, and post-retirement.
Despite benefiting from the post-war property boom and final salary pension schemes that subsequent generations are unlikely to experience, many pensioners have felt the weight of the recent recession.
Indeed, retirees expressed the most concern about their day-to-day survival (38%), as government cuts, falling annuities, and the rising cost of living all continue to bite.
And around three in ten said that they were choosing to help their offspring now, when help has been most urgently needed, rather than building an inheritance to leave behind in later years.
But many are finding themselves short as a result, with just half (48%) believing that they have enough to fund their retirement.
For others, though, it is a slightly different story. 30% of retirees – more than the twenty-somethings – said that having fun with their money was a major priority. 36% of respondents in their 70s confessed that they would be using their money to enjoy themselves.
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Ian Porter, Head of Wealth Management at Sanlam, discusses the findings for Which4U.
The upshot of this is that, for one reason or another, fewer people can expect a large windfall in the future after the death of their parents.
And this is likely to come as a shock to quite a few who remain trapped by the fiendish market conditions of modern life.
Around a third of people in rented accommodation said last month that they thought they would need a substantial windfall to have any chance of getting on the housing ladder (read more).
In an exclusive video for Which4U, Ian Porter, Head of Wealth Management at Sanlam Private Investments, said that parents were assisting their offspring earlier and had become mindful of their own needs.
"They’re saying 'Well, ok, we’ve given you that money now. We’ve given you a start in life. From this point onwards, it’s about us and what our needs are, and therefore if there’s anything left, you’ll get it, but we’re not necessarily going to plan for that to be the case.'"
He added that it was important for the younger generation to readjust their expectations and take responsibility for their own financial prospects.
"The knock-on effect for the younger generation is that they will continue to aspire to the standard of living and retirement that their parents have, but without maybe comprehending that this has come about as a result of final salary pension schemes, as a result of significant house price inflation during the 1970s, which has contributed to that building up of wealth," he said.
"That’s just not being repeated in the current economic circumstances that we find ourselves in. So they have to be a little bit more realistic about fending for themselves in the future."
Keith McDonald
Which4U Editor
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