Traditionally, parents have attached great importance to leaving an inheritance to their children, but attitudes are changing according to a recent survey by Just Retirement, the equity release and annuity provider.
The survey of retired homeowners and retiring homeowners aged over 55, explored consumer attitudes towards housing equity withdrawal and found that a majority of respondents are more concerned about maintaining their standard of living in retirement than saving their money to pass on to the next generation. Lifestyle maintenance is the single biggest thing motivator.
The survey also found that a slim majority of older retirees (55%) were more likely to feel that it was their duty to leave something for the next generation, whereas only 28% of those within a year of retirement thought it was important to leave as much inheritance as possible, compared with 38% of all respondents. A ‘Just Retirement ’ spokesperson suggested that basically, older retirees feel more strongly that they worked hard to own their home and are more likely to want to pass it on, whereas those coming up to retirement or who have recently retired now feel that passing on the home would be nice to do, but is not essential.
The Institute for Fiscal Studies has also released the results of a study into retirement, which suggests that the majority of people aged between 50 and state pension age could face a 20% drop in income when they retire, with 40% of retirees seeing their income fall by at least one-third.
In 2010, research by Aviva suggested that the longstanding practice of leaving an inheritance had been succeeded by a “pre-inheritance”, money given out of the estate of a benefactor who has yet to die, and that nearly half (46%) of British adults had in fact already received a pre-inheritance. However, even then, this ‘new’ trend was evidenced to be on the wane, with the research recording that only 17% of over-55s were saying they were planning to give a pre-inheritance to loved ones. In fact, one in five (20%) of this age group said they didn’t have enough money to pass on an inheritance early. A similar number (21%) said they need to keep hold of the money they have at the moment to be financially secure in the future.
The obvious benefit for many people of cutting the amount of money liable for inheritance tax, by gifting it early in pre-inheritance to beneficiaries in their lifetime, may now be slipping down the agenda, as older people become increasingly concerned about their own economic safety and wellbeing in retirement.
Sources: www.justretirement.com, www.aviva.co.uk, www.ifs.org.uk