We are all well aware that entering a financially secure retirement is becoming more and more difficult. Increased life expectancy and the impact of a global and domestic recession have taken their toll on our finances, while an increasing state retirement age means we are expected to work for longer. So when we are theoretically handed the key to a ready-made retirement fund it is no wonder that we see it as an easy way forward.
In fact our recent study of over 16,000 people in 15 countries, found that six in ten retired Britons expect to leave an inheritance to their children. So, what does this potentially mean for the next generation?
Financial gifts are always a bonus but it is when we start to depend on them for our future that we put ourselves at risk. Though Britons are among the most generous in the world, with over six in ten retirees expecting to leave an average inheritance of £183,144, it is vital that we do not come to rely on the fortunes of our ancestors instead of taking responsibility for our own financial futures.
Despite many parents expecting to leave an inheritance to their children, they are not a guaranteed retirement pot. Unforeseen hurdles may mean that - despite best intentions - they need to dip into the money to fund other things for themselves, such as medical and nursing care in later life.
Worryingly, we found that a high number of Britons are still banking on an inheritance to supplement their income when they reach retirement. Younger Britons are set to rely heavily on inheritances, with 21% of 25-34 year olds who expect to receive an inheritance saying it would largely fund their retirement. More shocking is that 10% of people globally believe an inheritance will be their sole source of income in retirement.
As tomorrow's pensioners fail to save for their future and instead rely on financial gifts from their parents, where does this leave our children? Unless we start to save now, we are destroying a legacy for the generations of the future. We live in a world where life expectancy is expected to continue to grow while the strains of future generations, particularly when it comes to healthcare provisions and lifestyle, will also increase.
Ultimately, while the figures suggest that some people might be surprised by their parents' financial generosity, this comes with a warning: you cannot predict what may happen between now and receiving an inheritance. The earlier you start preparing, the more financially secure your own retirement is likely to be.