One in four Gen Z reliant on inheritance over savings

A large proportion of younger people are deferring retirement saving in the hope that an inheritance will plug the gap, according to research from Standard Life’s Retirement Voice report. A quarter (24%) of Generation Z (those born between 1997-2012) say they’re not currently focused on retirement because they expect to receive money or property in the future. A similar proportion (23%) of Millennials (those born between 1981 and 1996) also share this view.

However, relying solely on inheritance to support retirement could prove to be a risky bet. Various factors, such as people living longer, increasing care needs, and rising living costs, mean estates may be more stretched than younger generations anticipate. Furthermore, the Government’s planned 2027 changes to inheritance tax, which will bring unspent pension pots into scope, could also reduce what’s passed on.

Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group said “It’s understandable that younger people may not see retirement as an immediate priority, especially when everyday costs feel more pressing, and they have more immediate financial goals like saving for a house deposit. Many may be banking on  future financial support and while it’s true that Millennials and Gen Z are set to benefit from a significant wealth transfer from Baby Boomers over the coming years, inheritance is rarely guaranteed and it could come later in life, or not be as much as expected.

“With so many variables, from care costs to potential tax changes, it makes sense to plan and build your own retirement savings, even if you hope to receive a boost later. Fortunately, there are straightforward and flexible ways to start building a retirement pot over time. By starting early and contributing little and often, people can take advantage of tax efficiency, employer contributions and potential compound investment growth, and help improve their financial security in later life.”