One third banking on inheritance for retirement

THE one in three people factoring an inheritance into their retirement plans are making a “dangerous mistake”, experts say.

Those counting on a windfall they’ve yet to receive may have to work while waiting for a loved one to die, or find their inheritance is spent on care bills.

As many as 34 per cent are depending on a bequest from family or friends.

Younger people have the highest expectations, the poll found.Yet only 29 per cent of all those quizzed plan to leave an inheritance themselves.

Women are markedly more reliant on inheritance payments (37 per cent compared to 32 per cent of men).

This is likely to be because they have a smaller pension pot due to being paid less than men and taking time off to have children. People aged 35 to 54 are most likely to need a bequest to get by in later life. Higher earners, who are used to a certain standard of living, are next most likely to plan their retirement around inheritance.

Sarah Coles, of Hargreaves Lansdown which carried out the research, warned: “Millions of people could be left high and dry if their loved ones change their plans.

“We know 36 per cent of homeowners do leave an inheritance. But if they’ve used equity release, the debt and interest may have rolled up to such an extent that when the property is sold, a significant chunk goes into repaying the equity release company.”

Today HMRC is also expected to confirm the surging trend in inheritance tax takings.

IHT raised a record £7.1billion in the latest financial year, £1billion more than the previous year.

It comes after high property prices pushed many above the £325,000 threshold at which 40 per cent tax comes due.