Counting on inheritance to provide for your retirement?

inheritanceThe older generation may have been very fortunate, financially. The steep rise in house prices may have given them a financial boost the like of which they could never have dreamed of, back in the 1960s.

As a result, many people have been looking forward to windfalls as their parents pass on. Many have been lagging behind in their own savings, depending on big inheritances as the property market keeps on turning ordinary houses into £million homes.

But things may not be going according to plan. The postwar generation is living longer, and many people are spending their savings as they find they have a longer retirement to enjoy. Advances in medical science have meant that many more people are living into their 90s. Care costs are rocketing. Due to increased longevity, adult children who have assumed they would inherit substantial wealth may be due for an uncomfortable awakening.

If you are expecting the bank of Mum and Dad to make a final payment which will fund your retirement, you might need to think again.

It’s hard to talk about

Things are not made any easier by the fact that it is hard to talk about inheritance. Bringing up the older generation’s mortality is not a great conversation starter and talking about running out of money can provoke anxiety for many parents. Many are uncomfortable discussing the details of their finances in the first place, even more so when they’re worried about disappointing their children.

On the other hand, adult children aren’t eager to talk to their parents about money for fear of coming across as greedy. It’s easy to feel guilty for thinking about your own financial needs when parents could be facing difficulties of their own.

Some might want to enjoy their wealth while they still can, but parents who do not have a ‘spend it all’ mentality may not have a great deal of choice.  If they run short of money, the family home may need to be used as a source of finance.  Equity Release schemes could mean there is simply no equity to pass on, although they can be set up to leave a small inheritance if parents can spare it.

So, what can you do?

The message seems to be a simple one. You simply can’t rely on the departing generation to fund your own golden years as well as their own.  If you can look at estate planning with your parents, it could help you make the most of any wealth that does remain to pass on, and ensure it comes to you rather than the taxman. However, you will still be better off making proper plans for your own future.

The first step is to get a projection of your state benefit entitlement via the Money Advice Service. Then, you need to work out how much income you really need in retirement and look at ways to make up the difference. You need to look at your savings, pensions and investments, and whether they are on track to provide you with the level of income you need in retirement.

If the results look disappointing, don’t despair – but don’t delay. The sooner you start taking control of your future, the less it will cost to build up a fortune of your own.

Get some help

Your future is too important to be left to chance, so it’s best to get the help of an expert.  Simply call us at Continuum.

The value of investments can fall as well as rise and you may get back less than you invested.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Estate planning is not regulated by the FCA.

Get in touch

If you would like to discuss further please call us on 0345 643 0770, email us at [email protected] or click on the ‘Contact Us’ link below. Thank you.

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