The desire to leave an inheritance is weakening as modern retirees become more realistic about using their assets to generate the income they will need for an acceptable standard of living in retirement.
Research by Just Retirement found that older retirees were more likely to believe in a duty to leave something to the next generation, while those approaching retirement are less inclined to sacrifice their own lifestyles to ensure there were assets to pass on when they died.
“Our research into attitudes towards equity release gave insights into how retiring and retired homeowners think about inheritance,” said Stephen Lowe, group director of external affairs and customer insight at Just Retirement.
“Basically, older retirees feel more strongly that they worked hard to own their home and are more likely to want to pass it on. This contrasts with those coming up to retirement or who have recently retired who feel that passing on the home would be nice to do, but is not essential.”
The research, the biggest study of consumer attitudes towards housing equity withdrawal drawn from more than 300 hours of in-depth sessions and telephone interviews with homeowners aged over 55, found that 38 per cent agreed that it was important to leave as much inheritance as possible while 48 per cent disagreed.
However, among those with one year or less to retirement, only 28 per cent thought it is important to leave as much inheritance as possible while 66 per cent disagreed. Similarly, the at retirement group were far less likely to be willing to sacrifice their own lifestyle to make sure they leave money to family, with only 17 per cent agreeing compared to 27 per cent of the overall sample.
“The priority for those in the run-up to retirement is how to generate sufficient income to maintain an acceptable standard of living. Faced with depressed pension returns, inheritance becomes far less important,” said Stephen Lowe.
“Younger segments of the research were more interested in using the wealth rather than passing it on because they face more uncertainty in their own lives about how their retirement finances will pan out.
“But it is not completely selfish. There was a sense they had done enough for their children and that the children were often in a better financial position than they were. Certainly the adult children we interviewed agreed with this approach and did not want their parents to cut back simply to leave an inheritance.”
There was a high degree of interest in passing on money before death so retirees could enjoy seeing it being used, although only a small number were aware this could be beneficial for Inheritance Tax purposes.
Overall 55 per cent agreed they would rather give money while still alive while 30 per cent disagreed. This number was higher among the recently retired with 70 per cent agreeing and only 17 per cent disagreeing, none of them strongly.
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