…as financial challenges threaten plans
Research by St. James’s Place1 found that while 68% of UK adults believe it’s important they leave an inheritance, the study highlights how mortgage and rental costs pose significant challenges for future retirees.
More than one in eight (13%) of those approaching retirement anticipate still having mortgage payments to make, compared to 4% of current retirees. Additionally, 16% foresee not owning a property in retirement and continuing to pay rent, reflecting the changing economic conditions faced by different generations.
Future retirees sacrificing inheritance plans to support other generations
Furthermore, 55% of future retirees expect to provide financial support to other generations in their retirement, stretching finances even further. For one in 10 (9%) supporting other generations means they will have to reduce the amount they are able to pass on in inheritance.
A third less likely to pass down assets
Unsurprisingly, against this backdrop, confidence among future retirees in their ability to implement inheritance plans is also falling with 26% admitting they don’t feel confident they have the right plans in place compared to 14% of current retirees. Overall, the next generation is a third less likely to pass down assets. While 65% of current retirees expect to pass down property to their family through inheritance, this figure drops to just 45% among those yet to retire. Similarly, cash savings are planned to be passed on by 60% of current retirees, contrasting with only 40% of future retirees who share the same intention.
Claire Trott, divisional director for retirement and holistic planning at SJP, commented:
““The next generation of retirees are grappling with unique economic circumstances compared to their parents and grandparents. Homeownership is increasingly challenging, leading many to anticipate paying off mortgages and renting well into retirement.
Additionally, supporting others financially in retirement is becoming more common. Overall, this means that fewer people think they’ll be able to pass on wealth or other assets to loved ones in an inheritance..”
She added:
“The study underscores the importance of proactive financial planning for future retirees to navigate the complexities of new financial norms and to also support intergenerational financial needs.
To secure a legacy for loved ones, it’s more important than ever to establish a robust financial plan early on. This will allow greater opportunity to build wealth over time, without making unnecessary sacrifices along the way and putting off retirement indefinitely.”
Summary of findings:
- 13% of soon-to-be retirees expect to still have mortgage payments, compared to just 4% of current retirees.
- 16% foresee renting instead of owning a home in retirement.
- Over half (55%) anticipate supporting other generations financially, further straining their resources.
- Confidence in passing down assets is waning: only 45% of future retirees expect to leave property, versus 65% of current retirees.
Research conducted for St. James’s Place by Opinium, among 4,000 UK adults between 27th February – 8th March 2024. All results are weighted to nationally representative criteria.