Inheritance Gap Widens as Over-50’s Pull the Plug

01 November 2016

Over 20 million UK adults are banking on receiving an average inheritance of £147,000. Yet 1 in 5 over-50’s have confirmed there’s less in the pot than they’d hoped for their dependents according to a new Co-op study*.

  • 21% of over-50’s say there’s less in the pot for loved ones than they’d hoped
  • Yet 41% of dependents have already mentally spent their inheritance  
  • Two fifths (38%) of over-50’s intend to have a good time spending their cash

The study, which looks into over-50’s attitudes to later life planning reveals an inheritance gap regarding what UK adults are expecting to inherit, verses what their friends and families are intending to leave.**  

A third (35%) of over-50’s said this was due to them retiring earlier than they’d planned and having to depend on the money. Furthermore, a tenth (12%) said whilst they haven’t yet used the money, they’re anticipating it will go towards care costs for themselves or their partner. 

For two fifths, (38%) of over-50’s, they’re putting themselves first and stating that their loved ones will get what’s left, after they’ve had a good time. A breakdown of how these over 50’s plan to spend their money is as follows:

Over 50’s Spending the Kids Inheritance

  • 60% plan to go travelling
  • 40% will use it for home improvements 
  • 24% will  blow it on a new or classic car 
  • 14% intend to spend it shopping
  • 8% intend to eat out in expensive restaurants

Meanwhile, two fifths (41%) of UK adults have already mentally spent their inheritance – despite the fact they may not receive it, with 1 in 3 planning to put it aside for their children and grandchildren, 1 in 4 saying they’ll pay off debt and a further 1 in 4 hoping to splash it on a holiday. A further breakdown of their intended inheritance spending habits is as follows:  

Adults who have already mentally spent their expected inheritance

  • 1 in 5 plan to make home improvements
  • 1 in 5 would use it to buy their first home
  • 1 in 7 would help their children or grandchildren buy a house
  • 1 in 10 would put it towards a second home
  • 1 in 12 intend on using the cash to start a new business

When asked how they would feel if their loved ones spent their expected inheritance ahead of them receiving it. A quarter (24%) said they’d feel their loved ones made a ‘bad decision’ and ‘wasted’ the money. A fifth (20%) said they’d be worried for the future, and a tenth (12%) said they’d be upset and angry that their loved ones did it out of spite.
When asked if over 50’s would feel any guilt if they spent their money as opposed to leaving it to their relatives:

  • Half (51%) said they’d worked hard all their lives and want to enjoy spending the money
  • A fifth (22%) said their loved ones should work hard for their own money 
  • Two fifths (39%) think their families will be ok financially so won’t need it 
  • A tenth (9%) would prefer to give their money to charity than family 
  • A tenth (11%) said they gave up a lot to look after their children so want to enjoy themselves 
  • A fifth (20%) decided life is too short after their partner suffered an illness

Solicitor James Antoniou, Head of Will writing 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, verses what they are likely to receive. This highlights that there is often a breakdown in communication when it comes to later life planning.

“For those who are keen to leave something for their loved ones and make sure their wishes are clear, it’s vital that they put a legally effective Will in place. Having an open conversation about what people own and the contents of their Will with loved ones can also manage their expectations and help avoid disappointment, and possible disputes, after they’ve passed away.”

*ONS data shows there is 51,339,161 UK adults (over the age of 18). 41% of this figures is 20,535,664.

**Research was conducted with a geographically representable example of 2000 UK adults in October 2016 on behalf of Co-op with Atomik.

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