‘Hidden gap’ emerging in over-55s’ wealth transfer plans

A ‘subtle but important’ gap is emerging between confidence in retirement spending and wealth transfer strategies among affluent parents aged 55 and over, according to Titan Wealth.

Its study of over-55s with children and assets of £650,000 or more showed that 92 per cent of this group who were likely to be subject to inheritance tax (IHT) were confident in how much they can afford to spend in retirement.

However, 94 per cent of financial advisers felt these parents could benefit from spending more strategically or making greater use of gifting to loved ones.

Almost half (49 per cent) of the cohort said they would be willing to spend or gift earlier if they felt confident it would not impact their long-term financial security, while a further 37 per cent were open to increasing spending or bringing gifting forward.

Two thirds (66 per cent) saw financial gifts as the most impactful when helping children or grandchildren access the property ladder, which Titan Wealth said highlighted a clear opportunity to better align financial confidence with more timely support.

Financial advisers were seeing this playing out in practice, with 68 per cent saying clients frequently retained wealth for inheritance that could have had greater impact if gifted earlier, while a further 17 per cent observed this very frequently.

More than a quarter (28 per cent) of respondents said preserving wealth for inheritance was influencing how much they spent in retirement, and 26 per cent of advisers identified this as a significant contributing factor.

However, advisers also pointed to a broader behavioural pattern as the primary barrier, with 29 per cent citing the widespread tendency to prioritise saving over spending.

Titan Wealth said that these factors combined highlighted a clear opportunity to rebalance habits by enabling individuals to make more strategic use of both spending and gifting, without losing sight of longer-term legacy goals.

Changing IHT rules were also prompting a shift in how this group approached wealth decisions in later life.

Advisers cited General Investment Accounts (56 per cent), cash savings (54 per cent), defined contribution pensions (42 per cent) and investment bonds (40 per cent) as the most common sources used for gifting.

In response to recent changes to IHT exemptions, 39 per cent of over-55s had already begun adjusting their estate planning, with a further 33 per cent expecting to take action.

Titan Wealth argued that this growing engagement suggested an increasing willingness to revisit how wealth is structured and passed on, creating an opportunity to integrate more proactive gifting and spending strategies alongside longer-term inheritance planning.

“Strategic spending and earlier gifting in retirement are effective but underutilised ways of reducing future IHT liabilities – and improving clients’ life experiences,” commented Titan Wealth chartered financial planner, Lee Quinn.

“While the vast majority of people approaching or in retirement are confident they know how much they can afford to spend in their later years, half would spend and gift more if they were happy it wouldn’t affect their security in the long term.

“As financial planners, it’s vital that we understand our clients’ priorities for expenditure during retirement, taking their concerns seriously but balancing it with effective planning.

“People have worked diligently throughout their lives, saving for retirement, so it’s always important to make sure the hard-earned money is used effectively to cover day-to-day life or even the unexpected health costs that may come later in life, but that it’s also spent and gifted in an enjoyable way.”

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