• March 29, 2024
 Live for today and not tomorrow?

Live for today and not tomorrow?

According to recent reports, traditional inheritances are ‘dying out’ and allegedly half of those in retirement are giving a ‘living inheritance’ before they die. A study found pensioners today are keener on seeing their relatives enjoy it while also escaping inheritance taxes.

With people living longer, this way they are less likely to have a larger pot of funds left upon death, meaning less for the taxman and more for themselves and their loved ones during their lifetime.

Caroline Connellan, Head of Wealth at HSBC, said working-age people “shouldn’t pin their hopes” on getting an inheritance. “New pension freedoms have made savings more accessible, but people should carefully consider the right balance between helping their family and making sure they have sufficient income through retirement,” she added.

In a poll conducted for the bank, one in five retired people said they were regularly giving money to one of their grown-up children. One in ten said they were helping grandchildren. Does your practice see this as a regular occurrence?

Around one in four working-age people in the survey, which covered of 16,000 people in 15 countries, said it was better to “spend all your money and create your own wealth”. Just 5% said it was better to “save as much money as possible to pass on to the next generation”. Do you concur with these results given the fact it was working-age people questioned? Or is your practice telling a different story? Do you feel the report findings are not consistent with your experience?

Would you agree that each generation has a distinctly different attitude to the statement “spend all your money and create your own wealth”? The banks survey covered 15 different countries where attitudes seem to agree.

David Cameron recently weighed in on the subject stating, “When you become a parent, absolutely everything changes. Everything you do is for your children. You’ve got this huge responsibility not just to love them but to provide for them.”

“That home that you have worked and saved for belongs to you and your family. You should be able to pass it onto your children. And with the Conservatives, the tax man will not get his hands on it,” he added. Do you consider this to be Election strategy talk or genuine thoughts?

Figures reveal that 10 million people in the UK are now over 65 years old. The latest projections are for 5.5 million more elderly people in 20 years’ time and the number will have nearly doubled to around 19 million by 2050.

Within this total, the number of very old people grows even faster. There are currently three million people aged more than 80 years and this is projected to almost double by 2030 and reach eight million by 2050. While one-in-six of the UK population is currently aged 65 and over, by 2050 one in-four will be.

The pensioner population is expected to rise despite the increase in the women’s state pension age to 65 between 2010 and 2020 and the increase for both men and women from 65 to 68 between 2024 and 2046. In 2008 there were 3.2 people of working age for every person of pensionable age. This ratio is projected to fall to 2.8 by 2033.

Do you agree with the above statistics? Has your practice seen an increase in clients requesting advice regarding their finances in terms of distributing it before death? Do you agree that clients are now giving more away as opposed to saving?

As we see each generation becoming ‘pensioners’, would you agree that perhaps wealth in terms of savings, assets etc. is declining given the recent history of recessions and cost of living increasing?

If the report findings are correct then it begs the question – are you pro ‘living inheritance’ or against?

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