Category Archives: Retirement

Forget leaving an inheritance, enjoy your retirement instead!

A retirement survey published  provides another stark reminder that we will all be working for longer and maybe never retiring, so why is it that retirees facing such an uncertain financial future are still intent on leaving an inheritance?

A report by HSBC, Life after Work, reveals that one in five people will never be able to afford to retire – something that the bank has deemed, B-movie style, as the ‘Age of the Unretired’.

Of the 1,050 people interviewed in the UK, 39% said they had not prepared adequately or at all for a comfortable retirement and 35% of those only realised they were unprepared when they hit retirement and it was too late.

People simply don’t have enough savings to fund the number of years they will live. HSBC said the average person lives 18 years in retirement but their savings are generally going to run out after 10 years.

What many people are unprepared for is that although their income will fall in retirement, their bills may not. A total of 52% of people in retirement have seen no reduction in outgoings and 17% have seen them increase – maybe due to nursing or medical costs.

The situation that we face is a combination of saving too little, underestimating our retirement age, and underestimating just how long we will live and subsequently how much money we will need in retirement.

To be honest, none of this is new. We all know we’re not making sufficient provision for our retirement. What did strike me about the figures though were the number of people intent on leaving a legacy behind.

A total of 69% of retirees expected to leave an inheritance to their children, including 31% who definitely plan to. The median amount UK retirees expect to leave is around £178,000, which I am assuming for most families will be the family home.

That’s a substantial amount of money to leave your loved ones. But should today’s retirees really be worrying about the next generation when they are struggling to fund their own retirement?

I’m 30 and to be honest I’m not expecting to receive any type of inheritance, but I know plenty of people who are expecting a nice chunk to pass down to them which will be the end to their financial woes, whether that’s finding a deposit for a house, paying off a mortgage, starting a pension, or even just paying off debt.

Do today’s retirees feel an obligation to live frugally in order to pass down the family home rather than downsize or release equity from it so they can live more comfortably? Is it fair for younger generations to put this sort of pressure on their parents and grandparents, or is it the older generations who are putting the pressure on themselves?

I don’t have children so it’s difficult for me to say how pressing this obligation is, but it seems to me that ensuring that your retirement is comfortable after decades of hard work is more pressing than making sure you leave money behind.

by Michelle McGagh on Sep 18, 2013