The “inheritance assumption gap”: should you rely on a windfall in retirement?

The research: a significant gap between expectation and reality

New research from Moneybox finds that approximately 10 million UK adults — around one in five — are counting on receiving an inheritance as part of how they plan to fund retirement. The average sum expected is £56,535. Yet under half of those expecting that money have actually had a conversation with the family members who would need to leave it to them.

That gap between expectation and confirmed reality is what the research describes as the “inheritance assumption gap” — and it represents a significant uncertainty in a large number of people’s retirement plans. An inheritance that has never been discussed may not materialise in the amount expected, on the timetable expected, or at all.

Putting £56,535 in context

The Pensions and Lifetime Savings Association estimates that a “moderate” standard of living in retirement requires around £32,700 a year for a single person. At that level of spending, £56,535 represents less than two years of retirement income.

That is not a trivial sum — two years of retirement income is genuinely useful — but it is also not a retirement plan in its own right. Someone retiring at 65 with a life expectancy extending into their late 80s needs to fund roughly 20 to 25 years of living costs. A £56,535 inheritance, if it arrives, covers a small fraction of that requirement. If it does not arrive — or arrives later than expected, reduced by social care costs or other claims on the estate — the gap it was intended to fill becomes a real problem.

Why expected inheritances may not materialise as planned

Estates that look substantial today can look very different by the time they pass. Several factors tend to reduce the value of estates between when people start thinking about inheritance and when it actually arrives:

• Social care costs. Residential or nursing care can cost £50,000 to £100,000 per year or more. A parent who requires several years of care before they die can consume a significant portion of the property wealth that their children were expecting to inherit.
• Longevity. People are living longer, which extends the period over which an estate can be drawn down through living costs and care before it passes.
• Property market changes. An estate whose primary asset is a family home is subject to whatever the local property market does between now and the point of probate. National averages are not guarantees for any individual property.
• Changing family circumstances. Wills change. Relationships change. An expected inheritance may be reduced, redirected, or disputed in ways that are not foreseeable at the point the expectation is formed.

None of this means that expecting an inheritance is unreasonable — it means that treating it as a reliable foundation for retirement planning without discussing it openly and planning around the risk of it not arriving is a significant gamble.

What you can plan around with more certainty

The alternative to planning around someone else’s estate is to understand what you already own and what it could potentially contribute to your own later-life financial picture. For the majority of UK homeowners approaching retirement, their property is their largest single asset — often more valuable than their pension fund and almost certainly more accessible in the near term than an expected inheritance.

Understanding your home’s current value, the equity it holds, and what options exist for accessing that equity gives you a clearer picture of what you can plan around with reasonable confidence. It does not require selling the property or making any commitment — it starts with information.

“A plan built on your own property wealth is a plan you control. One built on an expected inheritance is a plan someone else controls, without necessarily knowing they are part of it.”