Half of millennials banking on inheritance cash that might never arrive as retirees shift priorities

Almost half of millennials aged between 30 and 45 said receiving an inheritance was crucial to them being able to achieve their financial goals, a survey suggests. Meanwhile, 55 per cent of adults in Gen-Z – aged between 18 and 29 – said getting an inheritance would play an important role in securing their finances, a survey for Alliance-Witan found.Multiple generations made their thoughts about the significance of receiving an inheritance on their finances clear. But their expectations do not always match the reality of older people's retirement plans. Only 10 per cent of people aged 55 or over said they planned to prioritise leaving wealth behind for loved ones and were content cutting back on their own spending in retirement.And of those surveyed by the investment trust aged between 62 and 80, only 8 per cent said they planned to prioritise leaving wealth behind for beneficiaries, and would reduce their own spending in retirement to do so. But more than half of parents with children under the age of 18 said receiving or expecting an inheritance formed a vital part of their financial planning and ability to achieve their money goals, the research added. Only 10% of people aged 55 or over said they planned to prioritise leaving wealth behind for loved ones, a survey for Alliance-Witan foundAcross all adult age groups surveyed, only 15 per cent said they would prioritise leaving wealth behind if it meant curbing their own spending in retirement. Thirty-two per cent of people aged 55 or over surveyed said they would balance spending during their retirement with leaving a legacy for loved ones. Sixteen per cent of people aged 55 and over said they would prioritise spending money in their retirement, even if it meant leaving less wealth to their family once they died. Thirty-two per cent of people aged 55 or over surveyed said they would balance spending during their retirement with leaving a legacy for loved ones. But 19 per cent of over 55s said they did not expect to have any wealth to leave as an inheritance, Alliance-Witan said. Londoners were found to be the most likely to have claimed they needed to rely on an inheritance to achieve their financial goals, at 45 per cent. This dropped to 28 per cent of those surveyed in both Scotland and Wales. Among the survey respondents, 16 per cent said they had invested in the stock market in a bid to boost their finances, rising to 20 per cent in the millennial age group. The findings claimed that 32 per cent of millennials relied solely on cash savings to build their wealth. The data came from a survey last month of 2,000 adults conducted by Censuswide. Mark Atkinson, managing director at Willis Towers Watson, which manages Alliance Witan, said: 'The reality of modern retirement is changing, with people living longer and the cost of later life increasing. 'With pensions soon falling into inheritance tax estates, anticipated family windfalls become even less certain which can threaten financial goals. 'So while it’s understandable that people hope for a financial helping hand from their families to reach major life milestones, there’s a huge risk in relying on this to achieve financial goals.'Regardless of whether there’s a future inheritance, it’s sensible to plan for a self-sufficient financial future.'One in seven UK parents of children of all ages said they planned to prioritise enjoying their money in their retirement over leaving an inheritance, a report earlier in the year by Standard Life found.Mike Ambery, retirement and savings director at Standard Life, said the shift in approach had been driven by the disappearance of final-salary pension schemes, which provide guaranteed monthly pension payments that last for as long as the retiree lives.More people in the UK now have defined contribution pension pots, which can run out. Many pensioners also simply said they wanted to enjoy themselves after a life of working, Ambery said. From April 2027, new rules about how pensions are treated for inheritance tax purposes come into force. The new Labour policy announced in a previous Budget means most pensions will no longer be exempt from inheritance tax from April 6, 2027. This means that if you still have money left in your pension pot when you die, it might be subject to 40 per cent tax. The Government has estimated that of approximately 213,000 estates with inheritable pension wealth in 2027-28, about 50,000 will either be brought into the scope of inheritance tax for the first time or will pay more than they would have before the changes. Labour is bringing in the change as it wants to deter people from using pensions to pay less tax. To minimise the impact of the pension changes coming into force from April 6, 2027, you can gift money to loved ones while you are still alive, but there are limits and tax-free restrictions in place. Before making any major decision about your pensions or inheritance tax, it can be a good idea to get some help from a professional financial adviser. Are you banking on an inheritance – or someone planning on spending it all rather than leaving any money behind? Get in touch: editor@thisismoney.co.uk SIPPS: INVEST TO BUILD YOUR PENSIONAJ BellAJ Bell0.25% account fee. Full range of investmentsHargreaves LansdownHargreaves LansdownFree fund dealing, 40% off account feesInteractive InvestorInteractive InvestorFrom £5.99 per month, £100 of free tradesInvestEngineInvestEngineFee-free ETF investing, £100 welcome bonusProsperProsperNo account fee and 30 ETF fees refundedAffiliate links: If you take out a product This is Money may earn a commission. 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