Cheer up, millennials! You can look forward to £200k inheritances
THEY might see themselves as the poor relations of the baby boomer generation, but it seems things are finally looking up for millennials.
Instead of moaning about their inability to get on the housing ladder, millions of Britons in their late 30s and early 40s can look forward to getting average inheritances of £200,000.
In an ‘unprecedented’ transfer of wealth from old to young, more than 11 million can expect some sort of windfall from their hardworking parents or grandparents in the next 30 years.
Around five million 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 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: 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 millennials out of the housing market or left them with large mortgages.
The report found that three in ten 25- to 45-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 later 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: ‘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 because of social and nursing care costs.’
Millennial men are the first generation to earn less than their fathers, according to research from the Resolution Foundation, which also found those born in the UK since 1981 have suffered a bigger reversal in financial fortunes than their counterparts in most other developed countries except Greece.