Many people are 'gambling' on coming into a big inheritance to fund themselves in retirement, new research reveals.
Some 17 per cent of adults anticipate getting a significant sum, and nearly two thirds of them are relying on it despite the risk it might materialise late or never, or be smaller than they hope.
Young and middle aged people are more likely than over-55s to expect a generous bequest, according to the survey by Hargreaves Lansdown.
Government statistics show the average inheritance is £11,000, but among those aged 55-64 it is £33,000 and for among over-65s it is £20,000.
Meanwhile, the Resolution Foundation think-tank estimates that today’s 20-35-year-olds will receive an inheritance at an average age of 61.
Some 22 per cent of those aged 18-34 and 23 per cent of those aged 35-54 expect a large inheritance, Hargreaves found in its poll of 2,000 adults last month.
'The average age to inherit is around 61, but 13,000 people lived beyond their 100th birthday in 2018. It means their offspring could be well beyond their 70th birthday by the time they inherit,' warns personal finance analyst Sarah Coles.
She also says that the circumstances of the person you expect to inherit from may well change.
Variables include what they spend on their own retirement, whether they will need to pay for care, and lifetime gifts to friends and family members.
Another risk is someone's wishes about who they leave their money to might change, because of their relationships with potential beneficiaries, or they meet someone they want to prioritise, or they decide to help a charity, according to Coles.
'If the inheritance has never been discussed, then you may be barking up the wrong tree. They may not have the assets you expect or they may not plan to leave anything to you.
'Even if you get the inheritance you’re expecting, unless you do the calculations, it may not go as far as you expect.
'You need to have a clear idea of the kind of returns you can expect when translating a lump sum into an income – whether investing and taking the income or buying an annuity.'
Coles says millions of people are gambling on getting an inheritance to make ends meet, but this isn’t a sensible foundation to build your retirement on, and the last thing you want to do is tie it to the death of a loved one.
She suggests planning for not getting an inheritance with the following three measures.
1) Cover your essential expenses by other means: 'The best approach is to have a guaranteed income that will cover these costs – as a combination of state pension, defined benefit pensions and annuities.'
2) Have a plan B: 'If your pension savings will fall short without an inheritance, and you are forced to factor it in, you need a robust plan B you’re prepared to use. This could include things like downsizing your home or working part time into retirement.'
3) Talk to your family: 'If an inheritance is likely to play some part in your retirement income, you need to be as sure as you can be that you’ll get one.
'It may feel like a ghoulish conversation to have with your loved ones, but you can’t base your planning on a vague assumption and crossed fingers. You may even find they’re happy to make lifetime gifts, so you can be sure of what you’re going to receive – and when.'