Cheer up, millennials! You can look forward to £200k inheritances
MILLIONS of millennials and those in their late 30s and early 40s are set to inherit an average of £200,000 each over the next 30 years, according to researchers.
In an ‘unprecedented’ transfer of wealth from old to young, more than 11million people aged between 25 and 45 expect to receive some sort of inheritance from their parents or grandparents in the coming years.
and 5.1million are in line to get at least £50,000, according to the report by savings and investments firm Sanlam.
The total payment to this group of 5.1million will be £1.2 trillion, or an average of £233,000 each. That is more than the average uK house price of £227,000.
Sanlam chief executive Jonathan Polin said: ‘Our report highlights the scale of the intergenerational wealth transfer that the uK is set to see over the next few decades. This level of inheritance is unprecedented.’
The windfalls – should they materialise – will come as major boost to the finances of millions in their 20s, 30s and 40s.
rising house prices and subdued wage growth have locked struggling families out of the housing market or left them with large mortgages.
The report found three in ten 2545-year-olds expecting an inheritance of at least £50,000 are ‘putting off saving and living in the now because they know they have the money coming down the line’.
More than a third (34 per cent) said they will be ‘reliant on their inheritance to help with their finances in the future’.
Sanlam said 38 per cent of people plan to save or invest their inheritance, while 34 per cent plan to buy a house and 24 per cent plan to pay off debts such as a mortgage.
Mr Polin said: ‘Clearly, the recipients of this wealth are relying on their inheritance to act as a financial panacea.
‘This is understandable in the context of rising debt levels, stagnant wage growth and spiralling property costs, all of which have had a deleterious effect on disposable income. That said, over-reliance on inheritance could be risky.’
The report also warned that almost two million of those in line for an inheritance of £50,000 or more had not spoken to their benefactor about the situation.
Charlie Parker, head of portfolio management at Sanlam, said: ‘The millennial generation has an opportunity to inherit a substantial amount of money because of rising house prices.
‘But many people are placing an enormous amount of emphasis on that inheritance … and a lot of them are doing so without having had the conversation to check the inheritance is really there. It’s a hugely difficult conversation to have, but in our view a vital one.’
Liz Emerson, of the Intergenerational Foundation, said: ‘young generations may receive a shock if this wealth disappears due to social and nursing care costs – and those who do receive a windfall are likely to do so because they come from wealthier backgrounds.’