1 in 10 relying on inheritance to fund retirement

Pensions / Retirement
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Research reveals as many as 5 million are banking on inheritance to fund retirement.

More than 1 in 10 (11%) UK adults are relying upon an anticipated inheritance to fund their retirement while neglecting to save for later life using their own income, according to the results of an extensive VouchedFor research study.

We spoke to Robert Forbes, one of VouchedFor’s top-rated financial advisers in London, to get his take on the findings.

“It is dangerous to declare so far in advance that you will be relying upon something which may be exposed to far more tax than is currently the case. Tax changes to inheritance can make a huge difference and, while the amount of tax payable could go down, it is also liable to increase.

“Many also seem to ignore, or have not considered, the fact that people are now living longer. These individuals could come into trouble if their parents live into their 80s and beyond – which is increasingly likely – because that means they won’t get an inheritance until later than they had anticipated.

“The trend of relying upon inheritance also makes intergenerational wealth difficult to continue. If those that require inheritance to see them survive retirement have children, what will they rely upon when they eventually reach old age? In my opinion, parents looking to provide intergenerational inheritance should look at reversionary trusts and gifting as a starting point.

“However, it is also worth highlighting that relying upon inheritance is not always due to poor financial planning. Many people have put off saving for retirement in order to invest more of their savings in buying a property, which is both a legitimate and rational decision.

“As a general rule, a bespoke cash flow plan provided by a financial planner can definitely assist people in making sure they know how much inheritance they are set to receive, and when they will get it.”

If you have concerns with regard to saving for retirement, or would like guidance on how to best prepare for when you stop working, you could benefit from speaking to an independent financial adviser. To speak to a top-rated adviser in your area so as to ensure you are making the most of your money, search the VouchedFor database.

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