Nearly half (41%) of 55-85-year-olds with £50,000 or more in investable assets intend to pass on their wealth in their lifetime – but are worried that the cost of living will eat into the amount they can give, research from St James’s Place (SJP) has revealed.
The findings showed that on average they expect to transfer £192,000 ($238,742, €217,606), a quarter (24%) of their overall household wealth. A third of adults (31%) aged 55-to-85 with £50,000 or more in investable assets plan to transfer to their children or stepchildren, 7% plan to give to their grandchildren and 8% expect to transfer to another family member.
However, almost two thirds (62%) are concerned that rising inflation will impact or erode the amount of wealth they can pass on.
There are also concerns that the wealth intended to be passed on may now be needed to fund other costs instead. More than half (53%) of those planning on transferring wealth are worried that they will have to use it to fund social care costs for themselves.
A similar number of those surveyed (52%) are concerned they will need to use it to pay for social care for their spouse/partner, with around a third (33%) anticipating they will need it for their parents.
Some 38% think they will have to keep more of their money for their own retirement, due to increased life expectancy and 35% are concerned that their lack of retirement funds will mean they need more of the money that they had planned to pass on.
Recipients relying on funds
SJP’s research also finds that if plans to transfer wealth are altered, this could impact the recipients, many of whom are relying on the funds.
Two-in-five (40%) of those who expect to receive wealth in the next five years said they are dependent on these funds, with nearly one-in-10 (9%) saying they are completely dependent, due to financial difficulties.
Of those expecting to receive wealth, 27% said this would allow them a more comfortable retirement and 18% reported that this would enable them to clear debt. Just under a fifth (17%) would be able to cope better with the current economic environment and 17% anticipated having a more comfortable lifestyle, while continuing to work.
Despite concerns, SJP’s research also indicated that 44% of those intending to pass wealth on said the amount they plan to transfer to a loved one has increased, 42% said the amount has not changed and only 11% reported that it has decreased.
Claire Trott, divisional director for retirement and holistic planning at SJP, said: “The ‘great wealth transfer’ is widely anticipated, with younger generations expected to receive substantial lump sums over the next few years as ‘baby boomers’ look to pass on their wealth.
“However, it’s clearly a difficult financial environment at present, and this is impacting most of society. Our research shows that many people are relying on receiving wealth from other generations, and so concerns around being able to pass on less than originally planned are worrying.”
