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The inheritance divide: 3.5 million over 65s feel guilty about spending money

Posted in: Research

  • Three in 10 (29%) over 65s worry about spending money on themselves because of their family’s inheritance
  • One in five (22%) say the worry holds them back from spending
  • Majority (78%) would like to help loved ones become more financially secure by providing an inheritance
  • However, 91 per cent of younger adults would rather their relatives spent all their money to enjoy their life

Three in 10 (29%) over 65s worry about spending money on themselves because they have their family’s inheritance on their mind – the equivalent of 3.5 million[i] people across the UK.

This is according to new research from financial services provider, OneFamily, which reveals that more than one in five (22%) of those who experience spending guilt are holding back from spending on themselves.  

The majority (96%) of over 65s say their retirement is the ideal moment to make the most of their time, but many rank others over themselves. Without other financial priorities, a quarter (25%) say they would buy a new car and the same number would renovate their home, while two-thirds (65%) would take more regular holidays. However, one in 10 (11%) say their guilt stops them from spending on things like this which they consider ‘luxuries’.

These concerns stem from learned behaviour and tradition, with over half (52%) of over 65s believing they have a duty to financially support their younger relatives. This is in part being driven by the fact they benefited from older relatives’ wealth, with two in five (44%) receiving an inheritance from their parents.

With rising living costs and slow wage growth affecting younger generations, three quarters (78%) of over 65s would like to help their family become more financially secure. Three in five (62%) specifically say they want to help their loved ones become homeowners.

However, these feelings of obligation are at odds with attitudes of younger family members, with three in five (63%) admitting they worry that their relatives are holding themselves back to save money for their inheritance. An overwhelming 91 per cent of adults say they would prefer their older relatives to spend all of their money to enjoy their own life rather than leave an estate.

Regardless, four in five (80%) over 65s plan to pass on their wealth to their loved ones with nearly a quarter (23%) already knowing exactly how much they plan to leave – and many are willing to cut back on their own plans to ensure they can do so.

Many retirees would like to give a ‘living inheritance’, whereby the wealth is given to loved ones whilst they can see them benefit from the money. Gifting family members money is now one of the most popular uses for equity release with three in 10 (30%) older homeowners saying they would use the money tied up in their home to help their family or make the most of their later years.

Nici Audhlam-Gardiner, Managing Director of Lifetime Mortgages at OneFamily comments:

“It’s natural for families to want to financially support their loved ones whatever their age, whether that’s by helping them to get on the property ladder or supporting them reaching other financial milestones. However this needn’t come at the expense of their own enjoyment of their hard-earned wealth, particularly in later years. With most younger beneficiaries making it clear they would much rather relatives enjoy, over 65s should definitely not feel guilty about spending their money after years of hard work.

“When it comes to financial planning for retirement or providing a living inheritance, a lifetime mortgage is one of the options available to older homeowners. This allows them to access the wealth tied up in their home to spend on whatever they please, be that helping out younger family members financially or enjoying life’s little luxuries.”

[i] According to the latest ONS population data (November 2018), 18.2% of the population were recorded as being 65 years or older, which is 12,012,000 people. 29 per cent of over 65s worry about spending money on themselves’ as they have their family’s inheritance on their mind – the equivalent of 3,483,479.