Two-fifths (41%) of people are working longer, spending less, or are even downsizing so they can afford to give their loved ones an inheritance, research by Fidelity International has found.
Fidelity’s findings reveal many people are ‘gifting away’ their golden years by putting a variety of financial restrictions in place so that they can afford an inheritance. This follows its research revealing that more than two-fifths (43%) of the UK population expect to receive an inheritance one day – rising to almost two-thirds (65%) of younger adults.
Almost half (47%) of those hoping to pass on wealth said they have not made any financial plans about how to achieve this, with only one in five (20%) researching how much they will need for retirement income or later life care. Instead, many are making sacrifices which could have a negative impact on their quality of life.
Of these restrictions, 17% per cent said they are limiting their spending, while 12% are downsizing their property and a further 12% are working for longer or delaying retirement. More than one in ten (11%) expect to work part-time or sell valuable possessions (8%) to support their current lifestyles while still being able to afford an inheritance.
Despite these stringent measures, two-fifths (40%) are still concerned they won’t be able to provide an inheritance while maintaining their own standing of living. A further 23% said they worry that the impact of unexpected costs, such as long-term care, may have an adverse effect on their ability to give an inheritance.
Dawn Mealing, Head of Advice Policy and Development at Fidelity International, comments: “The expectation from nearly half of the population to one day receive an inheritance is overshadowing what most people see as their ‘golden years’, putting an undue amount of pressure on retirees when they should be enjoying the fruits of their labour. Our research has shown that two-fifths of people are making sacrifices to their own lives and retirements in order to afford an inheritance, but almost half have not considered how financial planning could help them cover these costs without having to make these sacrifices.”
Out of the 58% of the UK population planning on giving an inheritance one day, almost two-thirds (61%) have not created a will, while only one in ten (10%) have discussed their plans with a financial adviser. When asked why, 68% said they had just not gotten around to it, while 16% said they did not know where to start.
Dawn Mealing continues: “While delaying estate planning is understandable, most people don’t realise that it could actually have a detrimental effect to their financial wellbeing now and in the future. Firstly, it means that you may be putting unnecessary financial restrictions in place that are having a negative effect on your ability to spend now, and secondly if you pass away before making any plans, your inheritance may not be handled the way you intended.
“By speaking to a financial adviser, not only can you make sure your inheritance is gifted the way you want, but you can also discuss how can enjoy your later years without having to scrimp and scrape for an inheritance. Retirement is an important period in your life, and by speaking to an adviser you can plan for the retirement you deserve while feeling assured your loved ones will be looked after in future.”
