Nearly 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, 11% are still hoping they’ll 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. Their 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. 53% of people use this as their main savings method, with contributing to a cash ISA (40%) and having a work pension which they and their employer contributes to (39%) completing the top three. 10% of people state they currently have no methods in place when it comes to saving for retirement.
The 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. 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.”