Millennials banking on an inheritance that may never arrive

• 48% of Millennials say receiving an inheritance is important to achieving their financial goals
• Only 10% of those over 55 plan to prioritise leaving wealth behind if it means cutting their own retirement spending
• Just 20% of Millennials are currently investing in the stock market to achieve their goals

 
UK Millennials are placing their financial futures at risk by relying on an inheritance that might never arrive, according to new research from Alliance-Witan.
 
Just under half (48%) of Millennials say that an inheritance is important to them achieving their financial goals, rising to 55% among Gen Z. Furthermore, more than half (51%) of parents with children under 18 say receiving or expecting an inheritance is important to achieving their financial goals. Where people live is also a key indicator, with 45% of Londoners depending on an inheritance to reach their life targets, compared to just 28% of those in Scotland and Wales.

But these expectations are increasingly colliding with the reality of older generations’ retirement plans.

Instead of passing down an untouched nest egg, only 15% of UK adults, and just 10% of those over-55, say they will prioritise leaving wealth if it means cutting their own retirement spending. Furthermore, nearly a third (32%) of over-55s plan to balance spending with leaving a legacy, while 16% will prioritise enjoying their retirement even if it means leaving less behind.

Yet despite the uncertainty, few Brits are taking active measures to achieve their goals and build their own financial independence. Just 16% of UK adults, and only one in five (20%) Millennials are currently investing in the stock market to achieve their goals. There’s also a notable gender gap, with 20% of men taking advantage of the growth offered by investing compared to just 12% of women.

Instead, Millennials are aiming to build wealth by saving money in cash accounts (32%), reducing spending less or shopping in cheaper places (31%), aiming to increase their salary (20%), cutting back on holidays (17%), or living somewhere cheaper (15%).
 
Mark Atkinson, Managing Director, Willis Towers Watson, which manages Alliance Witan, comments: “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. That means building up a rainy day cash pot, but also putting aside money for investment that can grow over the long term. While investing can often seem daunting, taking small, sensible, and regular steps gives the best chance of achieving financial and wider life goals. Our free Learning Zone offers a series of beginner-friendly guides to help you get started.”