Around 10 million Brits could be left to cover almost two extra years of retirement living costs due to an inheritance “assumption” gap, a new report has found.
The study by Moneybox found that fewer than half of survey respondents (46%) have discussed inheritance plans with their loved ones, yet one in five UK adults (20%) or roughly 10 million expect to use inheritance to help fund their retirement. With those expecting an inheritance anticipating an average sum of £56,535, Moneybox said this gap in assumptions could leave retirement plans “in tatters”. With a ‘moderate’ retirement requiring £32,700 a year for a single person, losing out on this assumed inheritance represents a shortfall of nearly two full years of a comfortable retirement fund.
Brian Byrnes, director of personal finance at Moneybox, said: “Our research reveals millions could be facing an inheritance assumption gap. Quietly factoring future inheritance into retirement plans is not only risky but potentially devastating if fully relied upon.”
The research highlights the discomfort surrounding discussions about inheritance, with one in seven (15%) finding it awkward to discuss inheritance, one in 10 (12%) feeling it would be rude to bring up the topic, and 8% avoid the conversation entirely because they worry it might lead to family arguments.
More than one-third (36%) of adults believe that inheritance should not be relied upon when planning for retirement.
Mr Byrnes said: “Getting ahead and planning for your retirement should always be the first step, and this includes having open and honest communication with your family.
“While inheritance may ultimately play a role for some families, it’s not something most people can predict or control and with social care costs also rising, an estate that looks substantial today could look very different in 10 or 20 years.”
The money expert said retirement planning is strongest when it’s built around the savings and investments you can control, rather than depending on money that may come in the future – especially if it’s guaranteed to materialise in the way you expect.
He added: “It’s understandable that conversations about inheritance can feel uncomfortable, but where families are able to have open discussions, it can help manage expectations and give everyone greater confidence when planning for the future.
“And regardless of inheritance plans, taking small steps to get a better understanding of your pension and retirement income today can lead to a more secure future.”