Inheritance Expectations Deter Many Gen Z and Millennials from Saving for Retirement

A new study by Standard Life reveals that nearly a quarter of Generation Z adults are not actively focusing on retirement savings because they expect to inherit money or property. According to the research, 23% of Gen Z individuals (born between 1997 and 2012) say inheritance expectations have reduced their focus on building a retirement fund, while one in five millennials (born between 1981 and 1996) hold a similar view.

However, researchers caution that inheritance is far from guaranteed. The study found that many parents are re-evaluating their estate plans, with 15% stating they plan to prioritize enjoying their wealth during retirement over leaving an inheritance. Upcoming policy shifts are also influencing financial decisions: starting in April 2027, most unused pension funds and death benefits will be included in a person's estate for inheritance tax purposes.

In response to these changes, nearly three in 10 parents (29%) say the new rules will affect how they plan to use their pension in retirement. Specifically, 10% now say they are more likely to spend their pension savings during retirement rather than leave them behind, and 22% say they are more likely to gift money during their lifetime instead of bequeathing it.

Mike Ambery, Retirement Savings Director at Standard Life, advised younger generations not to rely on potential inheritances. "Inheritance can play an important role in family finances, but it is risky for younger people to build their retirement plans around money or property they may never receive," he said. "With people living longer and later-life costs rising, many parents may understandably want or need to use more of their savings during retirement. Inheritance should be seen as a possible bonus, rather than a substitute for building your own retirement pot."

Ambery encouraged Gen Z and millennials to focus on factors within their control, such as starting pension contributions early, maximizing workplace pension schemes, and increasing payments when salaries rise to benefit from long-term compound investment growth.