42 per cent of over-65s think they won’t have any money left to leave, while nearly one in five don’t want to hand it over
Is the tradition of leaving an inheritance upon death facing its own death? A recent report has identified a situation among retirees where they don’t want to or can’t leave a financial legacy to their heirs as concerns such as health costs, pensions and their own wellbeing take precedence.
According to 25UP, the report from wealth managers Sanlam Private Investment, 42 per cent of over-65s think they won’t have any money left to leave, while nearly one in five don’t want to hand it over, preferring to enjoy what they’ve earned. For those between 73 and 77, the figure for those who’d rather enjoy their wealth rises to over 50 per cent. In total, 45 per cent of over-65s don’t plan to leave an inheritance.
This sits in a painful contrast between those who have benefited from the property boom and final salary pension schemes and those facing later retirement, lower wages and an ungraspable property ladder. For a younger generation dealing with uncertain economic times, the prospect of losing a future windfall is worrying, especially given the increasing emphasis on inheritance as a safety rope rather than a bonus.
Never had it so good
Older generations may be thinking their descendants have never had it so good, says Ian Porter, head of Wealth Management at Sanlam Private Investment: retirees ‘can remember hardships such as rationing, which did not fully end until 1954, winters of discontent and the fear instilled by the Cold War… the early death of parents or close relatives in WW2 or as a result of health issues that would these days be easily treatable. By comparison, their own children have had it relatively easy.’
Pictured above: Greedy relatives will huddle over the will
Porter identifies a demographic shift to ‘retirees who are both healthy and wealthy and are enjoying that status… to be active, travel and enjoy a connection to the broader world that perhaps previous generations have had available to them.’
While the survey did not specifically poll HNWs, Porter has his own views on their attitudes to inheritance. He feels ‘an individual [has] to give serious thought to their own needs versus the desire to save those that inherit [from] their estate tax. Tax management has always been important to any client of significant wealth, however the observed dynamic is now one of managing the rate of depletion of capital as much as mitigation of eventual taxation.’
In American, a similar trend has been developing: according to the Wall Street Journal in 2012, ‘Among those with $250,000 or more in investible assets, only 41 per cent said preserving inheritances was a top concern, down from 54 per cent in 2009.’
The reasons behind these sentiments were not questioned in the survey, but it is clear that it no longer seems reasonable to make assumptions on inheritance either as an instigator or receiver.