One in five working Brits will not be able to comfortably retire without receiving an inheritance windfall, new research from LV has revealed, however most people surveyed plan to leave their children nothing.
Research carried out by Opinium on behalf of LV found that 35 per cent of just over 2,000 UK adults, of which 516 were retired, said they are reliant on inheritance for future financial stability.
However, 24 per cent of retirees plan to leave nothing to heirs or give their cash to charity.
A quarter of retirees state they do not expect to leave much to their children, while 20 per cent plan to blow their money in retirement rather than leave it behind and 4 per cent want to leave their cash to charity.
Survey respondees said that without receiving an inheritance they will be unprepared for their later years.
Around 20 per cent said they will struggle to retire comfortably without inheriting and 25 per cent will have to work longer than planned should they not receive such a windfall.
LV found that the most common thing that Brits said that they would do with an inheritance is to pay off their mortgage and clear other outstanding debts and 16 per cent would use inherited funds to bolster their retirement savings.
John Perks, managing director of LV retirement solutions, said: “People now spend almost as long in retirement as they do in the workplace, so it’s worrying to see that many people say they are reliant on something essentially out of their control to provide them with a comfortable retirement.
“With all the everyday demands on our time, retirement planning is often at the bottom of the to-do list, but it is important that people take steps to secure themselves the lifestyle they hope for in retirement. We would encourage people approaching retirement to seek advice to get the most out of their pension savings.”
In the Summer Budget, chancellor George Osborne confirmed changes to inheritance tax, marking the effective threshold at £1m.
At present, inheritance tax is payable at 40 per cent on the value of an estate in excess of the tax-free allowance of £325,000 per person. Married couples and civil partners can pass the allowance on to each other.
However, Mr Osborne confirmed that the government will introduce an additional nil-rate band when a residence is passed on death to direct descendants.
Per person, this will be £100,000 in 2017 to 2018, £125,000 in 2018 to 2019, £150,000 in 2019 to 2020, and £175,000 in 2020 to 2021.
donia.o’loughlin@ft.com