Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: “Inheriting money can go a long way towards plugging gaps in our finances. Receiving a lump sum can help you pay off your mortgage, pay for travel or give you a bit of extra money in retirement. However, for some receiving an inheritance has gone from a nice to have to something more like a necessity with just under one third of people saying they thought they would need an inheritance to have enough income to live on in their retirement years.
Younger people were more likely to say they thought they would need one though this may be because they haven’t had the chance to sit down and work out what kind of income they are on track for in their later years. However, it’s still the case that one in five people aged over 55 say they will need money from an inheritance to get by.
There are all kinds of challenges in relying on an inheritance. For a start, you may think that your elderly relative has more money than they actually do and so the inheritance you receive may not be what you were expecting. This can particularly be the case if the elderly relative needs to go into a care home which can drain people’s savings quickly. People’s circumstances can also change over time and the arrival of new spouses, children and grandchildren later in life may mean priorities shift and money needs to be allocated elsewhere. Relationships can also ebb and flow and you may find bonds that were once close are weakened over the years.
The key is to take control of your own retirement planning as much as possible, so you have an idea of how much you have and how much that is likely to give you in retirement. Having a good idea of the kind of lifestyle you want in retirement means you can be more targeted and plan how you are going to get there. Using online calculators will give you a sense of how much your pension will give you in retirement and this gives you the chance to put a plan in place to fill in any gaps. Increasing your own contribution every time you get a pay rise or new job can really help your pension grow and you should also make sure you are making the most of your employer contribution. Many employers contribute at auto-enrolment minimum levels but there are others who are willing to increase their contribution if you increase yours. If you have the spare cash, it can be a great way of boosting your contribution. Having a robust plan in place for your retirement gives you the confidence of knowing you are on track and will make you much less reliant on any kind of inheritance to help you fund your lifestyle.”
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