Despite over of half (53.9%) of Baby Boomers suggesting passing on wealth to their children is important, one in five (20.1%) of those surveyed said it could hold them back from spending in retirement.
For many of this generation, spending on family is already high. Over a quarter (27.3%) said family is already a significant expenditure.
Aegon’s research with Baby Boomers is part of a report (found here) looking at the key issues facing this generation.
Steven Cameron, Pensions Director at Aegon says: “As the youngest of the Baby Boomers reach the age they can access their pension, many will begin to think about inheritance planning and the desire to pass on wealth to loved ones. Transferring wealth is an ambition for many individuals and the introduction of the pension freedoms in 2015 has increased the options for doing so with over 55s now being able to access their defined contribution pension pot flexibly, taking out as much or as little as they like.
“For some retirees looking to pass on wealth, however, the desire to help family members may come at a cost if it means they hold back from spending in order to fulfil this expectation.
“It’s good that there are now more options for transferring wealth to the next generations. But whether it’s passing on remaining defined contribution pension funds on death or granting financial gifts earlier to help children on to the housing ladder, there are complex considerations including around tax.
“The options available and the tax implications will depend on your personal and financial circumstances so it is best to seek financial advice to make sure you are taking the best course of action for you and your loved ones. While for some the advice will show a degree of caution is needed to ensure savings do not run out in retirement, for others it could highlight a level of underspending and encourage a less frugal approach.”
• Over half (53.9%) of Baby Boomers say passing on wealth to children is important to them.
• However, the desire to pass on wealth may have an impact on their ability to enjoy retirement, with a fifth of Baby Boomers (20.1%) saying it might hold them back from spending more in retirement.
• Over a quarter (27.3%) of Baby Boomers say spending on family is currently a significant expenditure.
• Almost one in five Baby Boomers (19.1%) would choose to spend any extra money on a financial gift to children.
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