By Courtney Trenwith
Despite increased living expenses reducing how much is handed down, younger generations are still dangerously relying on their parents’ savings
The concept of inheritance is becoming less of a reality as workers face increasing living costs, making it difficult to save for future generations, a new HSBC study has found.
More wealth also is being redistributed during a person’s lifetime, rather than waiting to give it as inheritance.
In the UAE, more than 90 percent of working people said they provide financial support to a family member – one of the highest rates in the world.
About 84 percent of the 1,000 working people who responded to the HSBC survey said they expected to leave their savings to their children, although only 45 percent were confident of doing so.
While more than half (53 percent) of UAE respondents said they believe they will receive an inheritance in the future, only 39 percent have actually received one, leading HSBC to suggest there is a gap between hopes and reality.
“Traditional inheritance may be dying out, as people increasingly have to redistribute their savings during their lifetimes,” the HSBC report said, suggesting the growing existence of the concept of ‘living inheritance’.
HSBC Bank Middle East head of retail banking and wealth management in the UAE, Khalid Elgibaly, said the high expectations of receiving an inheritance were worrisome, given the emerging evidence that it was becoming less of a certainty.
“It is alarming to see that three-quarters of those who have received or expect to receive an inheritance believe that it will help to fund their retirement, especially with over a third (36 percent) thinking it will completely or largely fund their life after work,” Elgibaly said.
“Considering more than half (55 percent) of the working age population in the UAE feels inadequately prepared for life after work as they did not start saving early enough, they are putting their future finances at risk by relying on an inheritance that is increasingly becoming less likely.”
However, the report shows inheritance remains an important priority for UAE workers, with 69 percent saying they believe it is better to save at least some of their money for future generations and another 15 percent saying they want to leave as much as possible for their children.
Also, 73 percent of UAE workers said they were concerned about not being able to financially support family or friends in later life.
The report said the high emphasis on inheritance in the UAE is partly due to the expat population, including many who send home remittances to support their families.
The HSBC report surveyed 16,000 workers globally, including about 1000 in the UAE.