I'd rather pay thousands on a holiday: Meet the pensioners spending the kids' inheritance

I’d rather spend thousands on a holiday: Meet the pensioners spending the kids’ inheritance

Sarah and Geoff Moorhouse have their daughter Poppy’s blessing to spend all their money

Happily retired, Sarah Moorhouse says she 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 choosing 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, take holidays 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 recently sold 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 trend dubbed “skiing”, meaning spending the kids’ inheritance. It is challenging the idea that assets will automatically be passed on to the next generation.

Sarah and Geoff have two adult daughters. One of them, Poppy, tells the BBC she could not be happier that her parents are out and about enjoying themselves.

She strongly rejects the idea 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, says the shift towards skiing in the UK has been driven by the decline of final-salary pensions, which guarantee monthly payments for life.

Instead, more people in the UK now have defined contribution pension pots, which can run out. Ambery argues it is 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 who simply want to enjoy themselves after a lifetime of work.

“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.”

Of course, not all retirees are well off. In the UK, 16% of pensioners live in poverty, according to the Joseph Rowntree Foundation charity.

The figure for the US is 15.4%, newly released data shows.

At the same time, UK pensioners have seen their disposable income, excluding housing costs, rise by more than that of non-pensioners over the past three decades, according to the Institute for Fiscal Studies think tank.

Some 69% of retirees in the UK have a private pension in addition to their state one, official figures show.

In the US, 56% of pensioners

Karen Green, 60, says she has been very open with her children. “I have been quite explicit to say there is unlikely to be a legacy because I’m anticipating spending it all.”

Karen Green has told her children there may not be any money left for them to inherit

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 supplements 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 each month, she says 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 gets 40% of her funds from renting out a property.

But Karen insists she is not “crazy with money” and likes “to get a deal”.

Like Sarah Moorhouse, she will not get her UK state pension until she is 67. That is currently a standard £12,547.60 a year for people who reached state pension age after April 2016, but it is due to rise next year.

By comparison, retirees in the US receive 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).

However, people can choose to take a lower payment from the age of 62.

Matthew Loveless, a vice president at Northwestern Mutual, based in Ohio, says retirees need to be open with their adult children, some of whom may be expecting an inheritance they plan to rely on.

Back in Yorkshire, Sarah is planning her next holiday. “I’ve worked hard all my life and I think I deserve to have a bit of free time and to be able to do nice things.”