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Inheritance Plans Affected by Family Financial Support

New research has revealed that the proportion of new retirees who know they will be able to leave an inheritance to their loved ones has fallen to its lowest level in six years.

The annual study by Prudential found that despite changes in recent years to rules around inheritance tax and passing on pension pots, only 28% of people due to retire this year think they will be able to afford to leave an inheritance. This is a sharp decline from a high of 52% recorded in 2011.

Among this year’s retirees, those who feel they will be able to leave an inheritance expect to leave, on average, £191,000 – a figure which is virtually unchanged from last year.

One reason put forward by Prudential to explain the decline is that 35% of retirees are already providing regular financial handouts to family members, worth an average of nearly £250 each month or almost £3,000 a year. Meanwhile, 13% are paying more than £500 a month to support various family members.

“With the average retirement now lasting nearly 20 years, people retiring in 2016 who provide support to their families could hand over an average of £60,000 during their retirement,” commented Stan Russell, a retirement income expert at Prudential. “With this in mind it is perhaps unsurprising that the numbers of people expecting to leave an inheritance is on the decline.”

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