Family members anticipating an inheritance could find themselves disappointed. The vast majority of Baby Boomers have said leaving money behind is not a priority, according to a survey.
Trillions of dollars are estimated to be transferred from Baby Boomers across the US, Europe, and developed Asia to younger generations in coming decades, under what is being dubbed The Great Wealth Transfer.
In the UK, more than £5 trillion worth of assets is expected to change hands over the next 30 years. Millennials and Generation Z in particular are expecting to receive larger inheritances at a younger age.
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But their British Baby Boomer parents and grandparents have other ideas. Only 20% of those aged 60 to 78 said leaving an inheritance was a top-five retirement goal, with plans instead to spend their pensions on themselves.
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Even among the oldest in this group – those aged 70 to 78 – and those on the highest household incomes (£100k+) still only about a quarter put leaving cash as one of their top priorities, even though this can be a way to avoid inheritance tax.
Topping their list instead was spending time with friends and family – and seeing the world.
Nearly half (46%) said quality time with loved ones was a priority in retirement. Next was to travel abroad (37%) and travel in the UK (36%) and then to pursue new hobbies and interests (34%).
Although a significant minority chose helping children and grandchildren with their finances (18%) – sometimes called a ‘living inheritance’ – as a goal too.
The findings are part of an in-depth consumer insight programme, GenVoices, from retirement specialist Just Group.
Stephen Lowe, group communications director at Just Group, said: “Inheritance tax and estate taxes are hot topics, but the research suggests that leaving money is not high on the retirement agenda of most Baby Boomers.
“Overall, the priority of most seems to be to kick back and relax by spending time with friends and family or pursuing travel and hobbies – over other options such as working part-time or volunteering, setting up their own business or studying.”
Although Baby Boomers are often seen as the most financially privileged generation, the research suggests an awareness among most of this cohort that they have finite resources that will mostly be used up during their remaining lifetime.
Taking pension cash early
Separate findings showed the number of people making early pension lump-sum withdrawals as soon as they could hit a post-pandemic high last year. Experts are predicting the trend to accelerate ahead of upcoming inheritance tax rule changes.
A total of 120,000 individuals pulled a lump sum from their pensions at age 55 last year, up 10% on 2023, according to a Freedom of Information request from HMRC by Lubbock Fine Wealth Management.
The total value of those lump sum withdrawals by people aged 55 to 56 hit a five-year high of £2.2 billion in the year to 31 March 2024, also up 10% from £2 billion, raising concerns they could run out of money later in life.
Elsewhere in the Just research, Boomers showed a reluctance to downsize. Only 3% of current homeowners envisaged buying a different main home while 20% said they wanted to renovate their own home. Among renters, 4% wanted to buy a home.
Lowe said: “While about 70% own their homes, around one in seven of this group still have mortgages. Many of the non-homeowners will face paying rising rents over time.
“The wealthier tiers are quite comfortable, but the bigger picture runs against the common perception that Boomers are awash with dosh. The reality is that most Boomers are going to need to be careful with their cash and probably feel leaving money is a hope and not an expectation,” he added.
