Should Inheritance Be Considered in Retirement Planning?
When clients ask, “Do I have enough to last through retirement?”, it’s often one of the biggest and most emotional questions they face. After nearly 27 years as a financial adviser, I’ve become a huge advocate for running financial projections. These tools provide clarity, answer critical questions, and help us make confident decisions about the future.
But one topic that often arises—and sometimes divides opinions—is whether we should include a future inheritance in those calculations. My answer is: yes, but conservatively.
Why Projections Matter: The “Do I Have Enough?” Question
We’re all living longer, which creates both opportunities and challenges. Retirement is no longer a short phase of life—it’s decades long. While it’s critical to ensure that money lasts, there’s an equally important consideration: living life to the fullest while you can.
I often remind clients that saving too much for ‘later’ at the expense of today can lead to regret. There’s little point in putting off the fun stuff—the travel, the experiences, the memories—only to find you’re too old, too unwell, or simply no longer able to enjoy them.
The Role of Inheritance: A Strategic Consideration
Here’s where inheritance comes into the picture. As people live longer, inheritances are arriving much later in life—sometimes when the beneficiaries are already well into their 60s or even 70s. If there’s a known outcome, such as a certain lump sum coming your way, it can be factored into your financial plan.
This inheritance could give you greater flexibility to:
- Spend more in the early years of retirement—when you’re fit, healthy, and able to do the things you’ve always wanted.
- Enjoy experiences with your family now, rather than later when those opportunities may be gone.
I recently worked with a client who deeply regretted saving too hard during their prime years. They admitted that their overly conservative mindset held them back from enjoying life while their children were still young and under the family roof. Now, later in life, with their health in decline, there’s nothing they can do to get those years back.
It’s these types of regrets—things that should have been done—that we must avoid at all costs. And sometimes, factoring in a future inheritance allows you the confidence to live life without fear of running out of money.
Taking a Conservative Approach
It’s important to note that including an inheritance in retirement planning must be done carefully and conservatively. While it can provide flexibility and confidence, it’s not guaranteed. Circumstances can change—whether due to aged care costs, shifts in family dynamics, or unexpected expenses.
That’s why I believe it’s wise to:
- Include only known inheritances or realistic estimates.
- Use conservative figures to avoid relying too heavily on the unknown.
- Regularly revisit projections to account for any changes.
When done correctly, this approach allows you to enjoy the “golden years” of retirement while you’re fit and healthy, knowing that a future inheritance acts as a safety net for later years.
Balancing the Present With the Future
At its core, retirement planning is about balance:
- Saving enough to ensure your money lasts.
- Spending enough to enjoy life today and avoid future regrets.
Factoring in a future inheritance is one way to strike that balance. It gives retirees the confidence to spend and live fully, rather than scrimping and saving out of fear—only to leave behind unspent money and untold regrets.
Final Thoughts
Retirement isn’t just about lasting the distance; it’s about making the most of the journey. If a future inheritance is part of your financial picture, it can be a valuable tool to help you spend confidently during your early, active years.
The key is to plan carefully, project conservatively, and always keep one eye on what matters most: living a life with fewer regrets.
The information provided in this article is general in nature only and does not constitute personal financial advice.
