Are you banking on an inheritance to fund your retirement?

It’s often said that today’s young people will be financially worse off as adults than their parents.

After all, the 20 to 35-year-olds of 2022 have grown up in an environment of soaring house prices, stagnating incomes, low interest rates, university tuition fees and the fallout of a global financial crisis and a pandemic. So it’s probably no wonder that many have to rely on parental help when it comes to funding milestones like buying a property or getting married.

But now we have rising inflation to add to the list of obstacles standing in the way of young adults, as the ever-increasing cost of living means more and more are being forced to dip into savings or borrow money to simply make ends meet.

With all that in mind, it’s no surprise to see that many are pinning their long-term hopes on receiving a generous inheritance.

But it means these people are essentially gambling their financial futures on something that’s far from guaranteed. After all, do you know exactly how much money your loved ones actually have and what they plan to do with it? Do you know how much money they might leave to you personally?

At the same time, you can’t accurately predict what will happen in the future. For example, what if they have to move into a care home, and use a big chunk of their wealth to pay for this care?

Or what if they plan to make the most of their retirement, using the wealth they’ve built up during their working lives to enjoy costly activities and hobbies, such as regular trips abroad?

What if the nature of your relationship with a family member changes in the coming years and you end up estranged, or your loved one develops a significant new relationship, such as a new spouse, and chooses to prioritise them in their will?

Perhaps they want to leave money to a charitable organisation they’ve supported throughout their lives. What if they haven’t actually written a will or taken steps to minimise inheritance tax?

And finally, you have no idea when you’ll actually receive an inheritance. Your loved ones might live to a ripe old age, so it could conceivably be decades before any money comes your way.

There’s simply too much you can’t be sure of and have no control over, so you could potentially end up with much less money than you were expecting – and nowhere near enough to fund your retirement.

While many of us will hope and expect to receive some inheritance from our loved ones, we simply can’t let it be at the front and centre of our retirement plans.

You need to put something concrete in place, and plan your financial future without leaving anything to chance. That’s where a professional, regulated financial advisor can help you; advising you on everything from how much you should be putting into a pension to how you can invest your money to generate maximum returns.

If you have any questions on planning for your retirement, get in touch and we’ll be happy to speak with you.

Sources

https://theintermediary.co.uk/2022/07/two-in-five-need-an-inheritance-to-pay-for-retirement/

https://www.telegraph.co.uk/pensions-retirement/financial-planning/making-inheritance-mistake-will-leave-retirement-tatters/

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Garry Hale
MD & Certified Financial Planner

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July 27, 2022

Are you banking on an inheritance to fund your retirement? | HK Wealth