“I’d rather spend thousands on a vacation.” More and more retirees are spending money that they could leave as an inheritance to their children.
Pensioner Sarah Moorhouse uses her private pension "to be able to travel and enjoy life without hesitation."
While other retirees with a healthy monthly retirement income may decide to save to build an inheritance for their children, Sarah, 64, and her husband Jeff prefer to spend their money on living life to the fullest.
“We love going to Scotland,” says Sarah, a former school administrator. — We visited Cambridgeshire - it was wonderful there. We go to a holiday cottage in the Lake District quite regularly and are planning a trip to Norfolk.”
The couple, who live in Yorkshire, go on holiday four to five times a year, spending hundreds of pounds each time because, according to Sarah, “you only get one life.”
They recently sold their vintage Sunbeam Alpine sports car, only to replace it with a more modern sporty two-seat convertible, the Mazda MX-5.
“I’m at that age where I go to funerals and I think you just have to live and enjoy life while you can, because it’s such a valuable asset,” Sarah says.
Sarah and Jeff are part of a global personal finance phenomenon called “skiing,” short for spending the kids' inheritance. This phenomenon challenges the conventional wisdom that wealth will be passed on to the next generation.
According to a March report by private pension fund Standard Life, 15% of UK parents with children of any age now plan to prioritize enjoying their money in retirement rather than saving for an inheritance.
And in the United States, according to a study conducted by financial services company Northwestern Mutual, the number of people expecting to receive an inheritance from their parents fell last year to 20% from 25% the year before.
Sarah and Jeff have two grown daughters. One of them, Poppy, told the BBC that she was immensely glad that her parents lead an active and rich life.
She categorically rejects the idea that she and her sister should count on an inheritance: “For me it’s simply unthinkable. It never even occurred to me that I would receive money when mom and dad died. I'm much more willing to let them do what they want."
Mike Embury, director of pensions and savings at Standard Life, says the rise in popularity of skiing in the UK is linked to the disappearance of final salary pension plans, which provide guaranteed monthly pension payments throughout the retiree's life.
Instead, more Britons now have so-called defined contribution pension savings that are at risk of drying up. Of course, it's easier to be generous with your inheritance if you know your retirement income will last you the rest of your life, Embury says.
He also notes that retirees simply want to enjoy life after work: “Just have the means to enjoy life. Let's face it: for some people, work life can be very hard."
Of course, not all retirees live in abundance. According to the Joseph Rowntree Foundation, 16% of pensioners in the UK live in poverty.
According to recently published data, in the United States this figure is 15.4%.
However, at the same time, according to the think tank Institute for Fiscal Studies, over the past three decades, the disposable income of British pensioners (excluding housing costs) has grown more than that of people without a pension.
According to official figures, around 69% of pensioners in the UK have a private pension in addition to their state pension. In the US, 56% of retirees have a private pension.
Karen Green, 60, says she has been very open with her children. "I've made it pretty clear that there probably won't be an inheritance because I'm going to spend it all."
Originally from Berkshire, Karen has lived in Provence in the south of France for the past 11 years and spends more than £10,000 a year on holidays.
“I’m going on a yoga retreat this year. I was already at one in Morocco in March,” she says. “And then, from October to November, I will go to Vietnam and Laos to travel around those countries a little.”
She calls herself “semi-retired” because, in addition to her private pension, she still does business consulting - that is, the same thing she did before retirement.
When talking about how much money she makes per month, she notes that her income is the same as when she worked full time. In addition to her pension and income from her part-time job, she gets 40% of her income from rental properties.
But Karen insists that she doesn’t waste money at all, but loves to find a “good deal.”
Like Sarah Moorhouse, the British state will not pay her a state pension until she is 67. The standard pension is currently £12,547.60 per year (about $16,665) for people reaching pension age after April 2016, but this amount is due to increase next year.
