In short

Counting on an inheritance to fund retirement is risky because the timing is unpredictable (often arriving after retirement's early years), aged care costs can consume much of an estate, and a living person's will can change at any time with no legal entitlement for beneficiaries. Building a retirement plan on your own super, savings, and the Age Pension, and treating any inheritance as a bonus, is the safer approach.

It's one of the most common unspoken assumptions in retirement planning. Somewhere in the back of the mind sits a quiet expectation: "the house will come to me eventually," or "there'll be something from Mum and Dad to top things up." It rarely gets said out loud, and it almost never gets stress-tested — but it quietly shapes how much people think they need to save, and how freely they think they can spend. It's an understandable expectation, and sometimes it comes true. The trouble is that building a retirement plan that depends on a future inheritance is one of the most fragile things you can do, because almost everything about that inheritance is outside your control. Here's why, and how to plan so that an inheritance becomes a welcome bonus rather than a foundation you're relying on. This article is general information only, not personal advice.

Is the timing unknowable, and often late?

Australians are living longer than ever, and that alone unsettles the whole assumption. A parent in good health at 80 may well reach their mid-90s, which means you might not inherit until you're in your own late 60s or 70s — years after you've already retired, and long past the point where the money could have shaped your plan. An inheritance that arrives fifteen years into your retirement simply can't help fund the first fifteen years. The very time you most needed flexibility — the early, active years of retirement — is the time an inheritance is least likely to be available.

Can aged care consume much of it?

If a parent spends their later years in residential aged care, the cost can draw down their estate substantially. Residents face several charges at once: a lump-sum refundable accommodation deposit (RAD) or an equivalent daily payment for their room, a means-tested care fee, and the basic daily fee that every resident pays for meals, cleaning, laundry and utilities (My Aged Care, https://www.myagedcare.gov.au/aged-care-home-costs-and-fees). The basic daily fee alone runs to about $66.80 a day (as at 20 March 2026), and the accommodation deposit for a room is frequently a six-figure sum, which is why the family home is so often sold to fund a place (ASIC MoneySmart, https://moneysmart.gov.au/aged-care). An estate that once looked sizeable can shrink to very little over a few years — entirely legitimately — paying for a parent's care.

Is the amount genuinely uncertain?

Even without aged care, estates shrink for all sorts of reasons: medical costs, a long and well-lived retirement, a market downturn, or simply parents spending their own money on the retirement they worked for, which is entirely their right. The figure you have in your head today may bear little resemblance to what's actually left. It may also be divided more ways than you assume, or reduced by a family provision claim — a court application by someone who feels they weren't adequately provided for. And an estate can be eroded well before death too, through early gifting to others, or through a reverse mortgage the parent quite reasonably uses to fund their own retirement (our companion piece on what heirs actually inherit from a reverse mortgage looks at that in detail).

Can the will change, and do you have any legal claim?

This is the one people find hardest to sit with: you have no legal entitlement to a living person's assets. A parent can change their will at any time, for any reason or none. A new relationship late in life, a blended family, a falling-out, or a decision to leave more to a sibling who provided care or to a cause they believe in — any of these can redirect an estate you assumed was coming to you. A will is a statement of present intention, not a promise, and it stays changeable right up until death.

How should you plan so you don't need it?

The sensible response isn't to resent any of this — it's simply to build a retirement plan that stands on its own. Your plan should work on the strength of your own superannuation, your own savings, and the Age Pension (the means-tested government payment administered by Services Australia), so that it holds up even if no inheritance ever arrives. Treat any inheritance, then, as a bonus rather than a foundation. If it does come, it's genuinely useful — it can clear a remaining mortgage, top up your super, or help fund your own aged care down the track. But because it's upside rather than bedrock, its uncertain timing and amount don't put your retirement at risk. That's a far more comfortable position than quietly depending on money that may arrive late, arrive smaller than hoped, or not arrive at all.

What if your parents genuinely want to help?

Sometimes parents actively want to help their children financially, and would rather do it meaningfully than leave everything to an uncertain future estate. Where that's the case, the better path is an open family conversation about what everyone hopes for and can afford (our companion piece on talking to adult children about an estate plan covers the parent's side of that discussion). If lifetime giving is on the table, it needs to be done with the gifting rules in mind. Services Australia lets a pensioner give away up to $10,000 in a single financial year and no more than $30,000 over any five financial years without it counting; anything above those limits is treated as a "deprived asset", still counted in the assets test and deemed under the income test for five years from the date of the gift (Services Australia, https://www.servicesaustralia.gov.au/how-much-you-can-gift). Within those limits, help that is certain and timely is worth far more than an inheritance you're merely hoping for.

What is the catch even when it arrives?

One last thing worth knowing: an inheritance received while you're on the Age Pension isn't necessarily pure upside. Once it's in your hands it becomes an assessable asset — and you're required to tell Services Australia within 14 days of receiving assets or income from a deceased estate (Services Australia, https://www.servicesaustralia.gov.au/asset-types). Financial assets such as cash and investments are then "deemed", meaning Centrelink assumes they earn a set rate of income regardless of what they actually earn: 1.25% on the first $66,800 for a single person or $110,600 for a couple, and 3.25% above that (deeming thresholds effective 1 July 2026; the 1.25%/3.25% rates themselves last changed 20 March 2026 — DSS Social Security Guide 4.4.1.10, https://guides.dss.gov.au/social-security-guide/4/4/1/10). Between that deemed income and the extra assessable value, a windfall can actually reduce your Age Pension rather than simply adding to your wealth. Even the arrival of an inheritance needs a little planning, which is another reason not to treat it as the effortless answer to a retirement shortfall (our companion piece on how an inheritance affects the Age Pension goes further into this).

What do the worked examples show?

These show two very different ways the assumption can bite — the estate that shrinks, and the windfall that trims the pension. They are illustrative only, not personal advice, and the figures change with indexation.

Margaret, 62, still working and five years from retirement, quietly assumes she'll one day inherit her widowed mother's home, worth around $800,000, and has let that assumption keep her own super contributions modest. On these facts the assumption is fragile: if her mother, now 86, spends her final years in residential aged care, the home is very likely to be sold to fund the refundable accommodation deposit, and the means-tested care fee plus the basic daily fee of about $66.80 a day (as at 20 March 2026) will draw the estate down year after year (My Aged Care, https://www.myagedcare.gov.au/aged-care-home-costs-and-fees). By the time the estate is settled — perhaps when Margaret is in her seventies — what's left could be a fraction of $800,000, and it would arrive long after it could have shaped her plan. On these facts it is generally rational for Margaret to build her retirement on her own super, savings and the Age Pension as though no inheritance were coming, and to treat anything that does arrive as a bonus.

Frank and Susan, a homeowner couple in their early seventies on a part Age Pension assessed under the assets test, receive a $200,000 inheritance from Susan's late brother and place it in a term deposit. On these facts the windfall isn't pure gain: the $200,000 is now an assessable asset, and because the couple's pension is reduced under the assets test at $3 a fortnight for every $1,000 above their threshold, an extra $200,000 cuts their combined pension by roughly $600 a fortnight (around $15,600 a year), while the money is also deemed to earn income at 1.25% and 3.25% under the income test (DSS Social Security Guide 4.4.1.10, https://guides.dss.gov.au/social-security-guide/4/4/1/10). On these facts it is generally rational for them to expect the inheritance to lift their overall position but to plan for a lower pension alongside it, and to get advice on how best to hold or deploy the money — rather than assuming the full $200,000 simply adds to what they already had.

What is worth noting about doing this thoughtfully?

None of this is about viewing a parent as a resource, or hurrying anyone along — quite the opposite. Your parents are entitled to spend their own money enjoying their own retirement, to change their minds, and to make their own choices about their estate. The point is simply to take the weight of all that uncertainty off your own shoulders: build a plan that doesn't depend on any of it, and you free yourself from worrying about things you can't control — while still being glad, if the day comes, for whatever is left to you. If an expected inheritance is currently propping up your retirement numbers, that's worth raising with a licensed financial adviser sooner rather than later.

Sources

Key takeaways

  • An inheritance often arrives well into retirement, sometimes in your late 60s or 70s, too late to have shaped the early, active years when flexibility matters most.
  • Aged care costs — the accommodation deposit, means-tested care fee, and basic daily fee (currently $66.80 a day) — can substantially draw down a parent's estate before it's ever inherited.
  • A parent can change their will at any time for any reason, and beneficiaries have no legal entitlement to a living person's assets until they actually die.
  • The safer approach is building a retirement plan that stands on your own super, savings, and the Age Pension alone, treating any inheritance that does arrive as a bonus rather than a foundation.
  • An inheritance received while on the Age Pension isn't pure upside — it must be reported within 14 days, becomes an assessable asset, and is deemed to earn income, which can reduce the pension rather than simply adding to wealth.

Frequently asked questions

Why is it risky to plan retirement around an expected inheritance?

Because the timing, amount, and even whether it arrives at all are outside your control. Australians are living longer, so an inheritance may not arrive until well into your own retirement — too late to have funded the early years when flexibility matters most.

How can aged care reduce the size of an inheritance?

Residential aged care involves a lump-sum or daily accommodation payment, a means-tested care fee, and a basic daily fee (currently $66.80 a day), often funded by selling the family home. These costs can substantially shrink an estate before it's ever passed on.

Do I have a legal right to inherit from a living parent?

No. A parent can change their will at any time, for any reason. A will is a statement of present intention, not a promise, and it remains changeable right up until death, so there's no legal entitlement to a future inheritance.

Does receiving an inheritance always improve an Age Pension recipient's position?

Not entirely. An inheritance must be reported to Services Australia within 14 days and becomes an assessable, deemed financial asset, which can reduce the Age Pension under the assets and income tests — so the net benefit is smaller than the headline amount suggests.

A note on advice. This article is general information only and doesn't account for your personal circumstances. Everyone's situation is different — before acting, it's worth talking it through with a licensed adviser who knows your full picture.