Future retirees are a third less likely to leave an inheritance to their loved ones than current pensioners amid financial challenges, according to St. James’s Place.

As reported by our sister publication Pensions Age, it found that while 68 per cent of UK adults felt it was important to leave an inheritance, mortgage and rental costs posed “significant challenges” for future retirees.

More than one in eight (13 per cent) people approaching retirement expected to still need to make mortgage payments, compared to 4 per cent of current retirees.

Furthermore, 16 per cent foresaw not owning a property in retirement and continuing to pay rent, which St. James’s Pace said reflected the challenging economic conditions faced by different generations.

Over half (55 per cent) of future retirees expected to provide financial support to other generations in their retirement, with 9 per cent saying this would reduce the amount they are able to pass on in inheritance.

Amid these financial pressures, 26 per cent of future retirees did not feel confident they have the right plans in place, compared to 14 per cent of current retirees.

St. James Place found that the next generation of pensioners was a third less likely to pass down assets.

While 65 per cent of current retirees expected to pass property down to their family though inheritance, this fell to 45 per cent of those yet to retire.

Similarly, 60 per cent of current pensioners planned to pass down cash savings, falling to 40 per cent of future retirees.

Commenting on the findings, St. James’s Place divisional director for retirement and holistic planning, Claire Trott, said: “The next generation of retirees are grappling with unique economic circumstances compared to their parents and grandparents. Homeownership is increasingly challenging, leading many to anticipate paying off mortgages and renting well into retirement.

“Additionally, supporting others financially in retirement is becoming more common. Overall, this means that fewer people think they’ll be able to pass on wealth or other assets to loved ones in an inheritance.

“The study underscores the importance of proactive financial planning for future retirees to navigate the complexities of new financial norms and to also support intergenerational financial needs.

“To secure a legacy for loved ones, it’s more important than ever to establish a robust financial plan early on. This will allow greater opportunity to build wealth over time, without making unnecessary sacrifices along the way and putting off retirement indefinitely.”

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