Forget your inheritance, we spent it

IT USED to be that one generation of a family would build up the wealth and the next would get to spend it.

But a new trend is emerging among wealthy retirees - they're spending their hard-earned cash on themselves. Rather than leave all their money to the children - or the taxman - they are opting to live it up while they still can.

It's called SKI-ing, or Spending the Kids' Inheritance, and it's often encouraged by the younger generation, according to a report by market analyst Datamonitor.

Laura Meachem, the report's author, said: 'Traditionally, wealthy investors have looked to transfer most of their wealth to the next generation in the form of inheritance, but a new generation are looking to spend a higher proportion of their money enjoying themselves in retirement. They have worked for 30 years to get the money and they are going to make the most of it while they can.'

She added that people are increasingly using their money to help their family while they are still alive, by helping them get on to the property ladder or setting up a stakeholder pension for grandchildren, rather than leaving it to them in a will where it would be subject to inheritance tax.

The report found that nearly 70% of wealthy people in the UK - those with more than £200,000 in liquid assets - were over 55, while there were more rich people among the over-75s than in any other age group.

At the end of 2002, there were 396,000 wealthy retirees, up from 280,000 in 1997, with assets collectively worth £215bn, compared with £140bn five years ago.

Datamonitor expects the elderly to hold even more of the UK's wealth in the future as they make up an ever larger proportion of the population.

Inherent conservatism has helped to insulate many of the elderly rich from the stock market downturn.

Miss Meachem also found that many older investors maintain an active interest in how their money is managed, not least because it gives them something to do.