Future retirees expect to pass on £50,000 less when they die than their parents’ generation as the demands on their nest eggs grow with an ageing population and the need to help younger family members to blame.
Those with £50,000 or more in household assets who are not yet retired expect to pass on £74,000 in inheritance, a third of their savings, according to research by St James’s Place, a wealth manager.
This is down from the £125,000 those already retired expect to pass on.
Inheritances are projected to fall as the number of families with more than one generation retired at the same time is forecast to jump dramatically, to more than 700,000 in five years and more than a million in the next two decades.
Figures from the Office for National Statistics show 624,000 families included more than one generation of retired people in 2019. With increased longevity St James’s Place said the figure could rise steadily to almost 1.2 million by 2039.
More retired individuals in a family means more people relying on retirement savings for their income. At the same time, a quarter of future retirees expect to be financially supporting family members, up from 7pc currently.
Everyday living costs (17pc), school of university fees (14pc) and childcare (12pc) topped the reasons those still working expect to be helping relations.
Adrian Hotham, 58, is a retired dentist who lives with his wife and 90-year-old mother-in-law. The couple moved her in when she became unable to manage on her own, rather than pay the £700 a week care home fees. He said: “It can eat up a lot of the capital.”
He pays £8,000 a year from his pension for his son to study a Phd at Cambridge: "We budgeted for it. We also paid for his MSc. My NHS pension is very good. My wife, who has a teacher’s pension, and I have about £4,500 in monthly income.”
To help their son buy a property in Cambridge, they are selling his mother-in-law’s home.
“My son is the beneficiary of my parents’ will and mother-in-law’s will. When I bought my first property my dad gave me some money for the deposit.”
Claire Trott of St. James’s Place, which carried out the research, said with people living longer, the make-up of modern families is changing.
She said: “Building sufficient funds for your future whilst supporting other generations can seem a daunting task.
“The way we need to think about planning for the future has fundamentally shifted. The next generation of retirees can’t expect to follow the same path as those currently in retirement.”
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