Where there’s a will: Be careful not to bet your future on an inheritance

Are you looking forward to receiving an inheritance? Many Londoners are.

A study shows that four-fifths of those in the capital aged between 25 and 45 expect to be handed substantial inheritance from parents or grandparents.

But in doing so they could be storing up financial trouble.

That’s because relying on an inheritance as financial security is a hugely risky strategy.

More than half of those anticipating a windfall from their family expect at least £50,000.

Will they get the money when they need it? There’s simply no guarantee.

The research rings several alarm bells. Worryingly, almost half of those surveyed admit they are “living in the now” and putting off saving because they know they have money coming later.

And, though a third say they plan to buy a home with the proceeds of an inheritance, they may have a long wait.

“Many due for a windfall are relying on their inheritance to act as a financial panacea,” warned Rob Jones of wealth manager Sanlam UK which produced the research.

“In the context of rising debt levels, stagnant wage growth, and spiralling property costs, this is understandable but worrying.”

The 20% who say they will use their cash to pay off debt, could be in for a huge financial shock if they don’t take action to deal with their money woes sooner rather than waiting for an inheritance solution.

Debt is a problem that festers if it is not dealt with and those who think their finances are affordable could be in for a very nasty surprise indeed.

“While employment is high and interest rates are low, we’re confident enough to borrow and spend, and have less incentive to save,” pointed out Sarah Coles, personal finance analyst at Hargreaves Lansdown.

“However, what we’ve learned over the past 10 years is that the only guarantee in life is that things will change, and if we are to avoid being caught on the hop when they change for the worse, we need to keep borrowing under control, and have a savings safety net for emergencies.”

Experts reckon you should have a nest egg equivalent to three months’ salary to ensure you’re financially prepared for the future.