Traditional inheritance may be dying out: HSBC report

PanARMENIAN.Net - Traditional inheritance may be dying out, according to a new report by HSBC. Instead, it is being replaced by the growing practice of ‘living inheritance’.

In a survey of over 16,000 people in 15 countries worldwide, HSBC found that while nearly 74% of working age people expect to leave an inheritance to their children, only 29% are confident in doing so.

The attitudes of ‘Generation Spend’ will come as a surprise to the 51% of working age people who expect to receive an inheritance, suggesting a mismatch between hopes and reality.

Instead, HSBC’s report reveals the existence of a ‘living inheritance’, whereby 60% of retirees are providing regular financial support to their family and friends. In particular, it found that wealth is being passed down the generations, with nearly 22% of retirees regularly giving to grown-up children, and over 12% doing the same for their grandchildren.

While 22% of retirees currently provide regular support to their grown-up children, a similar number of working age people (21%) think it is better to spend all their money and let their children generate their own wealth.

The global urge to spend is highest among those closest to retirement, with 25% of those aged 55-64 preferring to enjoy all their money and fewer than 8% believing it is better to save as much as possible for the next generation. However, these are also among the respondents most likely to have weathered significant life events and global economic storms. Therefore, the ‘carpe diem’ mentality of people nearing retirement may not be as unexpected as initially thought.

The Future of Retirement, Choices for later life, report findings also suggest that millions of workers around the world are prematurely moving into semi-retirement because they are unable to find full-time employment. The findings suggest that the contributions of millions of experienced employees are being lost as they are deemed to be past their ‘work-by’ date.

Over 55% of those who semi-retired say they changed career when they stopped full-time work. While some of these will be high achievers who reached their career aspirations and financial goals before retirement, the figures also point to a pool of wasted potential among experienced employees.

This characterizes a shift from traditional perceptions of retirement where, instead of simply stopping work altogether, a gradual changeover is becoming the new norm. This shift highlights the greater choice working age people have when planning towards later life, and suggests an increasing confidence in their ability to fund a comfortable retirement.

Commenting on the findings of the report, Thies Clemenz, Chief Executive Officer of HSBC Bank Armenia

cjsc, said, “HSBC’s new Future of Retirement research highlights that working age people all over the world face the same complex financial pressures as they do in Armenia. This is multiplied by a desire to support loved ones during your lifetime, but for many people this comes at a cost both to their retirement dreams and to their ability to leave a legacy. Today’s working age people are putting their future finances at risk by not starting to save early, enjoying their accumulated wealth and relying on a living inheritance from retired loved ones, which may not always be forthcoming. In fact, retirement only seems to be far away, so today’s working age people need to be wiser to not place themselves under the financial strain they have witnessed among today’s retirees.”