With ski season in full swing and many heading for the slopes, there’s another kind of “SKI” trend gaining momentum – Spending the Kids’ Inheritance. New research from Standard Life suggests that while many parents remain committed to leaving something behind for their children, for some, retirement is increasingly about enjoying their own money rather than saving it for the next generation.
One in seven parents (15%) plan to prioritise enjoying their money and living for today over leaving an inheritance for their children or family, according to the research. Men are almost twice as likely to do this than women, with one in five (19%) prioritising enjoying their own money versus one in ten women (11%). However for many, balance is key - a further two fifths (44%) of parents say they want to strike the right mix between enjoying their retirement and passing something on.
Upcoming inheritance tax changes influencing retirement spending decisions
Recent policy changes, which will see pensions fall within the scope of inheritance tax from April 2027 onwards, are also playing on parents’ minds, with a third (29%) stating this will affect how they plan to use their pension in retirement. One in ten parents (10%) are now more likely to spend their pension savings during retirement rather than leave it behind, while over a fifth (22%) say they are more likely to gift money during their lifetime instead.
Inheritance expectations run high for many
While some parents are rethinking inheritance plans, younger generations may be banking on receiving one. Almost two fifths of UK adults (37%) say they expect to receive an inheritance from parents or relatives in the future, including 9% who say they are actively relying on it as part of their financial plan. However, nearly half (48%) say they are not expecting to receive any inheritance at all.
Mike Ambery, Retirement Savings Director at Standard Life said: “After decades of hard work, it’s only natural that many people want to use retirement to enjoy experiences they may have put off earlier in life. Whether that’s travelling more, picking up new hobbies or simply having greater day-to-day freedom, retirement is increasingly seen as a time to make the most of what you’ve earned. With many people now spending 20,30 or even more years in retirement, it’s important to recognise that this is not just a short chapter at the end of working life, but a significant stage in its own right.
“For many families, it’s about finding the right balance between enjoying their retirement and supporting their children. With pensions also set to fall within the scope of inheritance tax from 2027, it’s understandable that some people are reassessing how they plan to use their savings, and prioritising flexibility alongside longer-term planning.
“At the same time, expectations around inheritance can sometimes be built into younger people’s financial thinking. The reality is that an inheritance is never guaranteed and it can be influenced by a range of factors - and while inheritance may form part of conversations in some families, in others it may not be on the cards. It’s therefore important that every generation focuses on building their own financial resilience and long-term retirement security, and there are some very straightforward ways to start building a retirement pot over time.”
Mike Ambery shares key tips for those looking to maximise their pensions savings ahead of retirement:
Make sure you’re taking advantage of all the benefits of your pension plan, and your employer offers - “If your employer offers a matching scheme, where if you pay additional contributions your employer will match them, consider paying in the maximum amount your employer will match to get the most out of it.”
Keep an eye on how much is in your pension, on a regular basis – “If you know how much you have, you can work out how close you are to the retirement lifestyle you want. As UK workers now move jobs every 5 years on average, you might find you have a number of small pots - it might be worth considering bringing them all into one to make your savings easier to track.”
Getting a bonus this year? “Deciding to pay some or all of your bonus into your pension plan could save you paying some big tax and national insurance deductions. Meaning you could keep more of it in the long run, and it could be a great way to give your pension savings a boost.”
Even a small amount could make a big difference in the long term, especially if you’re starting young - “If you’re able to, think about paying a little more into your pension when you get a pay rise or have a little extra savings.”
Make sure your pension investments are working for you – “Pensions are investments, which means they have the potential to benefit from greater returns than cash savings but their value can go up and down. Try not to worry too much about any short-term dips as pensions are a long-term investment, and markets typically recover over time. If you’re unsure where your pension is invested, or whether it matches your goals and risk appetite, it’s worth speaking to your pension provider.”
Pensions are one of the most tax-efficient ways to save for the future “When you pay into your pension, you usually get a boost from the government in the form of tax relief – this means some of the money that would have gone to tax goes into your pension instead. If you’re a higher or additional rate taxpayer, the benefits can be even greater. It’s a smart way to make your money work harder for your future.”
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