Finance experts have warned younger generations not to expect money from inheritances.

Longer life expectancies, rising costs of living, and dwindling superannuation and pension payments mean that retirement nest eggs are likely to be used up rather than passed on.

Inheritances have been shrinking over recent years as changes to age pension rules strip retirees of their savings. With recent changes in the Federal Budget this trend seems only likely to continue.

Alan Hutchinson, senior economist from Prescott Securities, said “We are seeing the average person living longer and spending more. And there’s less money left at the end for everyone.

“We are seeing moves by the government to try and cut back the expenditure that has to be outlaid on the age pension system..  People already have to be more self-sufficient in retirement and this trend will continue to accelerate.”

The aged pension rules were tightened in Joe Hockey’s Budget last week. People with several hundred thousand dollars in assets will face either a reduced pension or none at all. It is expected about 90,000 people will be stripped of their pensions, while another 230,000 will now receive a reduced income from January 2017.

The government claims its hands are tied. Mr Hockey said the age pension was the biggest expense n the Budget – a full $44 billion a year, or 10 per cent of all government spending. So when cuts need to be made it was always likely the government would start there.

Lee Virgin, a financial adviser with Hillross, outlined the unfairness of this change: “Imagine saving all your life and building up a decent nest egg, and then being told that you have got more than you ar entitled to so you don’t get the age pension, but someone who didn’t save money does get it.”

Mr Virgin warned younger people not to expect any money from inheritances. Instead he suggested young people make the most of the money they are given now.

“Parents are saying ‘they’re going to get it anyway, so let’s help them out now.

“What I’m experiencing from real clients is that inheritances are getting smaller and smaller.”

Instead parents seem to be spending more in the early part of their children’s adult life (supporting them through their first years of work, contributing to a house deposit, going guarantor for loans etc.) and less in the later stages.

Children are, in one sense, ‘getting the estate early’.

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