Don't bank on the inheritance

More than 1 in 5 (22%) adults aged 26-35 years are hoping to cash in their inheritance to fund their retirement, according to research from Standard Life.

However, with over half (55%) of those aged 55-65 feeling worse off now than they did 12 months ago and 45 per cent of same age bracket predicting they will be worse off in another 12 months time, Standard Life warns not to bank on an inheritance alone to fund retirement.

The latest wave of the Standard Life Savings and Investment Index also found:

8% intend to use the money tied up in their property to fund retirement;
17% plan to move to a smaller property to fund retirement;
21% said that they will continue to work beyond retirement.

The young proved resilient to the current economic difficulties with over a quarter (26%) of those aged 18-35 feeling better off now than 12 months ago and more likely to feel optimistic about the next 12 months than those aged 36 and over. In addition to remaining upbeat about their financial future, over half of those under 36 are keeping an eye on the future and say they plan to save more going forward.

Commenting on the findings, Andrew Tully, Pensions Policy Manager at Standard Life said, "It's pleasing to see young people giving serious thought to their savings. Making plans to put money aside to fund retirement is a sensible move - no matter how young. With each generation living longer than the last, and the cost of living rocketing, many parents' plans of leaving behind an inheritance could be foiled. Taking responsibility for the future and not relying solely on a generous inheritance could mean financial freedom and peace of mind in years to come."

Julie Hutchison, Standard Life's Head of Estate Planning added, "For those who are able to leave a nest egg for their children and grandchildren, it's important to check that they are maximising the tax advantages available to them. Any inheritance amounts above £312,000 are potentially taxed at 40%, making a large dent in the potential nest egg. Taking time to write a will and to seek advice from a qualified financial adviser is time well spent and could possibly save thousands in IHT."