Britons are saving less money or waiting to buy a house because of hopes of a legacy windfall. Over 5 million UK adults have adjusted their financial plans as a result of what they expect to inherit, which is like playing 'inheritance roulette' warns Canada Life.
According to the figures released by the firm, 15% of UK adults aged between 16 and 54 - or more than 5 million adults - have decided their next financial steps based on inheritance expectations. The most significant alterations have been made to saving plans and property purchases.
As a result of what they expect to inherit, half of the under 55s surveyed said they were either saving less (25%) or saving more (25%). A type of financial planning that may not turn out as expected.
While inheriting assets such as property or other wealth can be a significant boon to an individual’s wealth, changing financial plans based on such a promise is short-sighted"
"It's a risky strategy to bank on an inheritance that may not materialise and an even riskier strategy to change your plans based on what you expect to inherit. By essentially playing inheritance roulette, people are putting their financial health at risk. This is especially true when you consider that there are over half a million people aged 90 plus in the UK, meaning that many people won't receive an inheritance until retirement, or possibly not at all in the instance that care costs erode the value of any inheritance," Neil Jones, wealth management and tax specialist at Canada Life said in a statement.
"On a positive note, those who decided to save more in light of their inheritance expectations appear to be taking a longer-term of their financial situation. Our research last year found that 1 in 25 people have inheritance expectations that amount to £1m, with 1 in 50 people's inheritance expectations exceeding £5m," he added.
The research also found that 22% of under 55s also plan to delay moving house until they receive their inheritance. Half of those (50%) who opted to stay put were aged between 16 and 34. However, less than one in six (14%) chose not to buy a house as a result of their inheritance expectations.
"While inheriting assets such as property or other wealth can be a significant boon to an individual's wealth, changing financial plans based on such a promise is short-sighted.
"That is why good conversations between benefactors and beneficiaries are so crucial. With the help of a financial adviser, these discussions can help heirs better prepare for their inheritance and ensure that inter-generational wealth planning makes the most of the opportunities available," Jones added.