Happily retired, Sarah Moorhouse is using her private pension “to go places and do nice things at the drop of a hat”. While other retirees with a decent monthly pension income may choose to build up an inheritance for their children, Sarah, 64, and her husband Geoff are opting to spend their money on living life to the max. “We like going to Scotland,” says Sarah, a retired school administrator. “We’ve been down to Cambridgeshire, which was lovely.
We go up to the Lake District quite regularly to a holiday cottage, and we’re planning to go to Norfolk.” The couple, who live in the Yorkshire Dales, go on holiday four or five times a year, spending hundreds of pounds each time because, in Sarah’s view, “you only have one opportunity at life”. They did recently sell their vintage Sunbeam Alpine sports car. But only so they could replace it with a more modern, sporty two-seater convertible, a Mazda MX-5. “I’m of an age where I’m going to friends’ and acquaintances’ funerals, and I think you just need to live life and enjoy it while you can, because it’s a very precious commodity,” says Sarah.
Sarah and Geoff are part of a global personal finance phenomenon that has been dubbed “skiing”, which stands for spending the kids’ inheritance. It is challenging the notion that assets will get handed down to the next generation. One in seven UK parents of children of all ages (15%) now plan to prioritise enjoying their money in their retirement over leaving an inheritance, according to a March report, external by pension provider Standard Life. And in the US, the number of people expecting to get an inheritance from their parents dropped to 20% last year, from 25% in 2024, according to a study, external by financial services firm Northwestern Mutual.
Sarah and Geoff have two adult daughters. One of them, Poppy, tells the BBC that she couldn’t be happier that her parents are out and about having fun. She firmly rejects the notion that she and her sister should expect an inheritance. “To me that’s wild.
It never even crossed my mind that I’ll get money when my mum and dad die. I’d so much rather them do what they want to do.” Mike Ambery, retirement and savings director at Standard Life, believes that the move towards skiing in the UK has been driven by the disappearance of final-salary pensions, which provide guaranteed monthly pension payments that last for as long as the retiree lives. Instead, more people in the UK now have what are called defined contribution pension pots, which can run out. Ambery argues that it’s easier to be generous with a legacy if you know your retirement income will last as long as you need it.
He also points to pensioners wanting to simply enjoy themselves after a life of working. “It’s just having a little bit of indulgence to enjoy life. Let’s face it, working life can be very hard for some people.” Not all retirees are well off, of course. In the UK, 16% of pensioners live in poverty, , externalaccording to the Joseph Rowntree Foundation charity.
The figure for the US is 15.4%, newly released data shows., external But at the same time, UK pensioners have seen their disposable income, excluding housing costs, increase by more than that of non-pensioners over the last three decades, according to the Institute for Fiscal Studies think tank, external. Some 69% of retirees in the UK have a private pension in addition to their state one, official figures show., external In the US 56% of pensioners, external have a private pension. Karen Green, 60, says she has been very upfront with her children. “I have been quite explicit to say there is unlikely to be a legacy because I’m anticipating spending 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.
“This year, I’m going to a yoga retreat. I did one in March in Morocco,” she says. “Then in October into November I’m going to Vietnam and Laos to do a little bit of a tour.” She describes herself as semi-retired, as she tops up her private pension by still doing some business consultancy work, the job she used to do full-time. When it comes to how much money she has per month, she says that her income is the same as when she was working full-time.
In addition to her pension and income from her part-time work, she gains 40% of her funds from renting out a property. But Karen insists she’s not “crazy with money” and likes “to get a deal”. Like Sarah Moorhouse she won’t get her UK state pension until she is 67. That’s currently a standard £12,547.60 a year for people who reached the state pension age after April 2016, but it is due to go up next year.
As a comparison, retirees in the US get state payments known as social security retirement benefits. The maximum annual amount starting from the “full retirement age” of 67 is $49,824 (£36,993)., external However, people can choose to take a lower payment, external from the age of 62. Matthew Loveless, a vice president at Northwestern Mutual, based in Ohio, says retirees need to be upfront with their adult children, some of whom might be expecting an inheritance that they intend to rely on. Back in Yorkshire, Sarah is planning her next holiday.
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