Millions of Brits could be making retirement plans based on inheritance assumptions formed without ever having discussions with their families. The new Psychology of Retirement study from Moneybox points to an inheritance blind spot among UK adults.
The findings, out today, reveal an ‘inheritance assumption gap’ quietly forming across the UK. One in five UK adults (20%) or roughly 10 million UK adults expect to use inheritance to help fund their retirement but, despite this plan, many have no knowledge of what that could look like or if indeed they will receive anything. With those expecting an inheritance anticipating an average of £56,535, this assumption gap could leave retirement plans in tatters. To put that into perspective, a ‘moderate’ retirement requires £32,700 a year for a single person, meaning that losing out on this assumed inheritance represents a devastating shortfall of nearly two full years of a comfortable retirement fund.
And with those expecting an inheritance anticipating receiving an average of £56,535, this inheritance assumption gap could leave retirement ‘plans’ in tatters.
Among those expecting to receive an inheritance, fewer than half (46%) have even broached this topic with their loved ones and are, therefore, in the dark about what they might actually receive. Meanwhile, more than one in five (22%) admit they have never had the conversation at all but still assume they will inherit money in the future, this rises to 33% of 35 to 54 year olds the next cohort of retirees.
The research also highlights how uncomfortable conversations about inheritance remain. More than a third (36%) of adults believe inheritance should never be relied upon when planning for retirement. One in seven (15%) say discussing inheritance feels awkward, while more than one in ten (12%) believe it would be rude to raise the topic, while 8% avoid the conversation altogether because they fear it could lead to family arguments.
The findings suggest many people could be building retirement plans on uncertain foundations, with assumptions and a lack of open family conversations potentially leaving gaps between expectation and reality.
“Our research reveals millions could be facing an inheritance assumption gap. Quietly factoring future inheritance into retirement plans is not only risky, but potentially devastating if fully relied upon.
“Getting ahead and planning for your retirement should always be the first step, and this includes having open and honest communication with your family. While inheritance may ultimately play a role for some families, it’s not something most people can predict or control and with social care costs also rising, an estate that looks substantial today could look very different in 10 or 20 years. Retirement planning is strongest when it’s built around the savings and investments you can influence yourself, rather than money that may arrive years down the line – or may not materialise in the way you expect.
“It’s understandable that conversations about inheritance can feel uncomfortable, but where families are able to have open discussions, it can help manage expectations and give everyone greater confidence when planning for the future. And regardless of inheritance plans, taking small steps to get a better understanding of your pension and retirement income today can lead to a more secure future.”
Brian Byrnes, Director of Personal Finance at Moneybox
