Don’t rely on that inheritance

As I regularly remind my mother- and father-in-law, 1948 was the luckiest year in which to be born.

 

According to Prudential, cradle-to-grave NHS care, gold-plated final salary pensions, an unprecedented housing boom and remarkable technological and medical advances have made those reaching the State Retirement Age (65) in 2013 the luckiest generation yet.

 

On the other hand, their offspring may be left wondering when things will start getting better. Recent research highlights that young people have been hardest hit by the ongoing economic malaise, with unemployment at record highs and income for ‘twentysomethings’ down 12% in real terms compared to 2007/08 versus a rise of 2-3% for the over-­60s, according to the Institute for Fiscal Studies.

 

It is therefore increasingly tempting for members of Generations X and Y to base their future financial security on the inheritance that they hope their parents will leave to them.

 

However, we believe that this would be particularly reckless for two reasons:

 

First, an American study from Penn State University calculated a 60% probability of at least one member of a 65 year old couple living to age 90. This means that the expected windfall may not happen for some considerable time.

 

Secondly, there is a clear disconnection between parents’ and children’s expectations. While 75% of 20-35 year olds expect an average inheritance of £78,000, according to Skipton Building Society, 37% of parents expect to spend all their money during retirement. In fact, 49% have started dipping into the pot already.

 

The message is clear: you may get nothing; and those that get something may have to wait until approximately 2038 (when those born in 1948 turn 90 years of age).

 

Our advice?  Ignore the inheritance entirely and start planning for your future on your own two feet.  Don’t hesitate to get in touch if you would like some guidance in terms of taking responsibility for your family’s financial security.