Nearly one in three people believe they will need an inheritance to help fund their retirement, according to new research from Hargreaves Lansdown.
The survey of 2,000 people, conducted by Opinium in May, found that 32% said they thought they would need an inheritance to have enough income to live on in later life. By contrast, 44% said they would not need one, while a further 24% were unsure.
Younger adults were most likely to see inheritance as essential, with 39% of those aged 18 to 54 saying they would rely on it. Among the over-55s, that figure dropped to 21%.
DEPENDENCE ON FAMILY WEALTH
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said inheritance was shifting from being seen as a “nice to have” to something more like a necessity.
“Inheriting money can go a long way towards plugging gaps in our finances. Receiving a lump sum can help you pay off your mortgage, pay for travel or give you a bit of extra money in retirement.
“However, for some receiving an inheritance has gone from a nice to have to something more like a necessity with just under one third of people saying they thought they would need an inheritance to have enough income to live on in their retirement years,” she said.
Morrissey warned that relying on family wealth was risky, given the uncertainty of people’s circumstances. “You may think that your elderly relative has more money than they actually do and so the inheritance you receive may not be what you were expecting.
“This can particularly be the case if the elderly relative needs to go into a care home which can drain people’s savings quickly,” she said.
She added that family dynamics could also shift, with new spouses, children and grandchildren entering the picture and relationships changing over time, all of which could affect how estates are divided.
THE CASE FOR PLANNING
The research underlines the importance of taking personal responsibility for retirement planning, Morrissey said. “The key is to take control of your own retirement planning as much as possible, so you have an idea of how much you have and how much that is likely to give you in retirement,” she said.
Practical steps such as using online pension calculators, increasing contributions with each pay rise and checking whether employers will boost their own contributions can all help build a stronger retirement fund, she advised.
“Having a robust plan in place for your retirement gives you the confidence of knowing you are on track and will make you much less reliant on any kind of inheritance to help you fund your lifestyle,” she said.
