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SJP signals about waning retirement prospects

The value of inheritance will decrease in the next 20 years by which time 1.2 million families are expected to contain more than one retired generation, according to research from St James’s Place.

The advice giant’s study of 4,000 adults in the UK found retirement income is set to be severely stretched with around 240,000 more families expected to be caring for two unemployed generations by 2029 compared to now.

This figure jumps to 568,000 by 2039, representing a 91 per cent change from today’s numbers.

SJP head of pensions strategy Claire Trott says: “With people living longer, the make-up of today’s modern family changing, and retirement provision more and more the responsibility of the individual, the way we need to think about planning for the future has fundamentally shifted.

“The next generation of retirees can’t expect to follow the same path as those currently in retirement.”

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Future retirees who hold a “sufficient amount of wealth” are expected to pass on £50,606 less of their retirement pot on average compared with current retirees, the figures revealed.

Those with £50,000 or more in household assets that will pass on a percentage of their retirement fund to future generations have an average of £261,375 in retirement funds available. They will expect to pass around half (48 per cent) on to family.

Future retirees in the same financial position by asset wealth are expected to have £235,143 in available retirement funds, and pass on 32 per cent.

Trott says: “Passing wealth on to our loved ones is one of the final acts of kindness we are able to make, so it is concerning that the amount many believe they will be able to pass on is eroding.”

Of those surveyed who receive face-to-face advice, 79 per cent said they believed they hold sufficient funds to fulfill retirement plans. This compares to a total 35 per cent of non-advised clients.

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Currently, 17 per cent of financial support passed down the generations is for everyday living costs, ahead of 14 per cent for school or University fees and 12 per cent for childcare.

With one in five Brits feeling pressured about having to provide financial support to others, Trott says families should consider whether building a financial plan early could help them to achieve their financial retirement goals comfortably.

She says: “Putting in place the right plans at an early stage will allow greater opportunity to build wealth over time and leave behind as much as possible when you’re gone, without making unnecessary sacrifices along the way.”

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  1. Perhaps SJP could demonstrate their CSR credentials by reducing their charges then?!

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