Retirees Prioritize Experiences Over Inheritance in Growing 'Skiing' Trend
A growing number of retirees in the UK and US are opting to spend their savings on travel and leisure, challenging traditional notions of leaving an inheritance.
A global personal finance trend, dubbed "skiing" (spending the kids' inheritance), is seeing retirees prioritize experiences and enjoyment over leaving behind financial legacies for their children. This shift is driven by a desire to live fully in retirement, coupled with evolving pension landscapes and a re-evaluation of life's priorities.
Sarah Moorhouse, a 64-year-old retired school administrator from the Yorkshire Dales, exemplifies this trend. She and her husband Geoff regularly use their private pension to fund multiple holidays each year, travel to a holiday cottage in the Lake District, and recently upgraded their classic car to a modern convertible. "You only have one opportunity at life," Sarah stated, reflecting a sentiment that life is precious and should be enjoyed. They are part of a growing cohort where "you just need to live life and enjoy it while you can, because it's a very precious commodity," she added.
This approach is supported by their adult daughter, Poppy, who expressed happiness that her parents are enjoying their retirement. Poppy rejects the idea of expecting an inheritance, stating, "I'd so much rather them do what they want to do."
In the UK, a March report by pension provider Standard Life revealed that 15% of parents plan to prioritize spending their retirement money over leaving an inheritance. Similarly, in the U.S., a study by financial services firm Northwestern Mutual indicated a drop in the number of people expecting an inheritance from their parents, falling to 20% last year from 25% in 2024.
Mike Ambery, retirement and savings director at Standard Life, attributes the shift in the UK partly to the decline of final-salary pensions. The prevalence of defined contribution pension pots, which can be depleted, may make individuals more cautious about leaving a legacy if their retirement income is not guaranteed for life. However, he also highlights the simple desire for enjoyment after years of hard work.
Karen, who has lived in Provence, France, for 11 years, also spends significantly on travel, including a yoga retreat in Morocco and a tour of Vietnam and Laos. She supplements her private pension with part-time consultancy work and rental income, maintaining a comfortable lifestyle. While not "crazy with money," she prioritizes experiences.
Despite this trend, it's important to note that not all retirees are financially secure. In the UK, 16% of pensioners live in poverty, according to the Joseph Rowntree Foundation. The U.S. has a senior poverty rate of 15.4%. However, according to the Institute for Fiscal Studies, UK pensioners' disposable income, excluding housing costs, has seen a greater increase than that of non-pensioners over the past three decades.
Financial professionals advise open communication between retirees and their adult children. Matthew Loveless, a vice president at Northwestern Mutual, suggests that retirees should be upfront with their children, some of whom may be relying on an expected inheritance. Sarah Moorhouse echoed this sentiment, asserting her belief that having worked hard, she deserves to enjoy her free time and pursue enjoyable activities.