Traditional inheritances 'dying out'

More and more retirees are financially supporting their loved ones while often sacrificing their own retirement goals.

Traditional inheritances may be dying out, according to new research from HSBC.

More than half (58%) of working age people in the UK expect to leave an inheritance to their children while only about a third have ever received one.

The HSBC report notes the rise of 'living inheritance', with half of retirees giving regular support to their family and friends including their partner (32%), grown-up children (18%), grandchildren (9%) and parents (5%). It's likely some of this is down to tax planning, with financial gifts in life designed to limit Inheritance Tax on death.

Despite this generosity, 22% of retirees worry that they won’t be able to support their loved ones financially while 18% fear they might be the ones who are financially dependant on friends and family during retirement.

More than a quarter of working age people say that it’s better to spend all your money and let children create their own wealth while only 5% say it’s better to pass on as much money as possible to the next generation.

It seems that there are unrealistic expectations as to how far inheritance can go however, with 54% of working age people expecting it to help them get through retirement and 15% saying that it will largely or completely fund it.

Sadly, over half (53%) of retirees haven’t been able to fulfil at least one of their goals since retiring, possibly as a consequence of 'living inheritances'. Unachieved dreams include writing a book (15%), starting a business (13%) and doing charity work (8%).

See your financial life in one place with Plans: start your 30-day free trial today

Tips for a more comfortable retirement

HSBC offers four tips to help you secure the financial future you want.

Be realistic about your retirement aspirations

Decide what kind of retirement you want and make sure you budget carefully. Regular holidays are among the most popular goals (61%) but among the most expensive so if that's what you want to do, make sure you set plenty of money aside.

Review your long-term working plans

Think about what you want to do in the future work-wise, whether that’s fully retiring, semi-retiring or staying on to work for longer. If you want to change jobs or work reduced hours, figure out how it will affect your finances.

Consider your wider financial commitments

Remember to take your loved ones’ needs into account when you do your retirement budgeting as well. Your partner, children, grandchildren or ageing parents might need to be financially dependent on you during your golden years. 

Have a clear retirement plan

Don’t rely on your inheritance as it's not likely to stretch as far as you expect, so make sure you have a solid financial plan for your retirement. Seek a financial adviser if necessary.

See your financial life in one place with Plans: start your 30-day free trial today

More on financial planning:

How to work out how much you need to save for retirement

Making a will

What to do if you’re made redundant