A recent survey by Prudential, Class of 2011 found that 26 percent people will cancel plans to leave inheritance for their family in a desperate bid to increase their own income. Another 22 percent were not sure if they will be able to leave behind anything since their retirement pots may prove insufficient.
Only 52% of the respondents said they have enough money to fund retirement and would leave money for family.
“Obviously the focus for retired people has to be on their own retirement income and so leaving a financial legacy can become a secondary consideration”, said Gerry Brown, tax and trusts expert at Prudential.
“Our research shows that inheritances are increasingly in the ‘nice to do’ rather than the ‘need to do’ box because of uncertainty around being able to afford a comfortable retirement.
“For those who do hope to leave a financial legacy there is a risk of assets that increase in value being left exposed to tax as the threshold for inheritance tax is frozen until 2015.
“It is therefore imperative for people looking to leave an inheritance and secure a comfortable retirement income to seek professional financial advice in the run-up to retirement and to save as much as possible, as early as possible”, he added.
The survey also found that less number of women – 48 percent compared to 56 percent of men, were confident of leaving behind a financial legacy for family and dependents.
While 43 percent of the people living in Wales were confident of leaving an inheritance, the chart topper was Scotland with 67 percent confident of leaving behind money.
“We know that most people are wildly over-optimistic about their financial future. To improve retirement income is no great mystery or secret – you need to spend less than you earn and save the rest”, said Robert Lockie of city-based Bloomsbury Financial Planning.
“Having a plan based on what you expect to need, using realistic assumptions about what you can achieve and then following that plan is likely to help a lot. Of course most people do not have a plan, do not save enough and do not invest wisely so their pessimistic expectations may well become reality”, he warned.