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11% of Britons relying on inheritance to fund their retirement

21st December 2015

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An eye-watering near five million people are relying on an inheritance pay-out to fund their retirement, according to new research from The Share Centre.

Despite the recent pension reforms offering savers far more flexibility when it comes to funding their retirement, more than one in 10, at 11%, are still hoping they will be in line for an inheritance to do the job for them.

To gauge their opinions towards their pension and inheritance, along with their thoughts for the future, The Share Centre conducted research with over 1,500 19-87 year olds.

The responses set out a rather sombre tone for the future of pension savings, with most wanting to enjoy their money now and rely on an inheritance pay-out as their pension safety net.

The findings also revealed that when it comes to putting money away for retirement, it is topping up a savings account which is the most popular way to save.

The analysis found that 53% of people use this as their main savings method, with contributing to a cash ISA and having a work pension which they and their employer contributes to completing the top three, at 40% and 39% respectively.

But a worrying 10% of people state they currently have no methods in place when it comes to saving for retirement.

The study concluded that a generation of non-savers has an extremely different outlook to the one before it; who are already planning to leave money for their children to inherit.

Almost two thirds, at 64%, of people aged 65 – 74 have already planned to keep money aside for the younger generation, despite the damage to their own savings that this might do.

Richard Stone, chief executive of The Share Centre, said: “Holding out for a pot of money that isn’t necessarily guaranteed is a very risky game to play, and people need to take control of their long term savings to be sure it will come through. Even if you are left a healthy inheritance it’s unlikely to fund your whole retirement which could last 30 years or more.

“Indeed with increased life expectancy more and more individuals will have already retired before they inherit, to say nothing of where this approach will leave the next generation.

“The best way to prepare for the future is to save early and save often. Investing little and often into an ISA, for example, can have a huge impact on your future financial health – especially when you appreciate the power of investing in equities and reinvesting dividends. While investing has inherent risks, you cannot argue with the fact that the UK stock market has delivered a return of over 600% since 1990.”

2 thoughts on “11% of Britons relying on inheritance to fund their retirement”

  1. Jive Bunny says:

    “…a generation of non-savers has an extremely different outlook to the one
    before it; who are already planning to leave money for their children
    to inherit.”

    Perhaps that’s exactly why the younger generations don’t feel a need to save????

  2. Jive Bunny says:

    “Holding out for a pot of money that isn’t necessarily guaranteed is a very risky game to play”

    Then again exactly the same may be said of investing in equities which Richard Stone recommends. I don’t know where he get’s his 600% return number from but if we take the FTSE 100 as a proxy, it’s value at end 1990 was 2144 and is currently 6035.

    The difference of 3891 constitutes 181%. I find it hard to believe that hhe compounding effect of reinvested dividends could make up the 419% shortfall to Richard’s claim.

    Looked at another way the Ftse 100 was at 6930 at end 1999 and where is it now??

    I suspect Richard has taken a selection of the best performing companies over the last 25 years, assuming buying them when at their cheapest and selling when at their most expensive (easy to type and spot the inflection points with hindsight but a different matter when investing in the present) in arriving at his outrageous claim.

    Of course, as an employee of the Share Centre I guess he does have a commercial axe to grind……

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