Inheritance may seem like the norm — more than 85 per cent people of working age in the UAE, and more than three-quarters (74 per cent) globally, expect to leave their savings for their children — however, new independent research commissioned by HSBC reveals that traditional inheritance may be dying out, as people increasingly have to redistribute their savings during their lifetimes.
The findings were based on a survey conducted across 15 markets with 16,000 respondents of which more than 1,000 were from the UAE.
Nearly seven out of ten people in the UAE (69 per cent) say that they believe it is better to spend some money and save some to pass on the next generation. However, while some people of working age have more of a say in deciding what to do with their money, a majority are facing difficult financial choices and are increasingly finding it difficult to save.
Financial obligations to their dependents weigh on people’s ability to not only save for their own retirement but also to leave behind an inheritance for their loved ones.
This sentiment is particularly acute in the UAE as nearly 92 per cent of pre-retirees in the country say they provide regular financial support to at least one other person, which is among the highest across the world and far exceeds global average of 73 per cent.
“Given the high proportion of expatriates in the UAE, including Western, Asian and Arab, it is not surprising to see that a majority here provide regular support to their dependents. While this sentiment appears to be very apparent here, it is increasingly making it difficult for people to leave behind an inheritance,” said Khalid Elgibaly, Head of Retail Banking and Wealth Management, UAE and Mena, HSBC Bank Middle East Limited.
Owing to various economic factors, pre-retirees show varied confidence levels in being able to leave an inheritance to their children. In fact, while 85 per cent expect to leave something behind for their loved ones, only 45 per cent are confident of being able to do so.
This mismatch between hopes and reality is further visible as only 39 per cent of people of working age in the UAE say they have received an inheritance, while more than half (53 per cent) believe they will receive one in the future.
“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 thinking it will completely or largely fund their life after work. Considering more than half (55 per cent) of the working age population in 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,” Elgibaly sai
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