'Inheritance gap' warning as survey finds less in the pot to pass on
Many people are heading for an "inheritance gap" between the amount of cash they are expecting to receive and what they are likely to get, a survey suggests.
A fifth (21%) of people aged over 50 said they have less in the pot to pass on as an inheritance to their loved ones than they had hoped, Co-op Legal Services found .
One in three (35%) said this shortfall was due to them retiring earlier than planned, and having to depend on money that may otherwise have been passed down the generations, while one in eight (12%) are anticipating putting money towards care costs for themselves or their partner.
Many also said there would be a smaller pot to inherit because they wanted to spend their money on enjoying their retirement, perhaps by travelling, buying a new car or dining out.
This could create a financial gap for many who are pinning their hopes on receiving an inheritance - as the Co-op found two fifths (42%) of people have already mapped out how they plan to spend an inheritance that they expect, but have not yet received.
Those surveyed who already have plans for the inheritance they expect to receive are hoping to put the cash to a range of uses, including clearing debts, putting money aside to help their children get on the property ladder, starting a new business, buying a holiday home, or making home improvements, the survey found.
The new retirement freedoms launched last year give over-55s more flexibility over how to spend their pension pot, meaning they now have more opportunities to access their money. Several studies into how the freedoms are going so far have pointed to people largely behaving sensibly with their money.
When asked by the Co-op how they would feel if their loved ones had spent their expected inheritance, a fifth (20%) said they would be worried for the future, the survey of 2,000 people found.
Asked if they would feel any guilt about spending their money instead of leaving it to relatives, more than half (51%) of over-50s across the survey said they had worked hard all their lives and wanted to enjoy spending their cash.
A fifth (22%) said their loved ones should work hard for their own money, while nearly one in 10 (9%) said they would prefer to give their money to charity than to family members.
A fifth (20%) of over-50s said they had decided "life is too short" after their partner had suffered an illness.
James Antoniou, head of wills at Co-op Legal Services, said: "With people working longer, it's understandable that they do want to enjoy themselves in later life.
"It's interesting however that there is such a gap in terms of what adults in the UK are expecting to inherit from loved ones, versus what they are likely to receive. This highlights that there is often a breakdown in communication when it comes to later life planning."
He said that having open conversations about wills can help manage people's expectations - as well as helping to avoid disappointment and possible disputes.