Value of inheritances could DOUBLE in 20 years… but it will come too late to help younger generations get a foot on the housing ladder, think-tank says
- Less than one in three will benefit from an expected boom in household wealth
- Older relatives will pass on wealth later due to financial uncertainty in retirement
- The typical age at which 20 to 35-year-olds will receive inheritance is now at 61
- Resolution Foundation found just 32 per cent of people expect to inherit in life
The value of inheritance is expected to double over the next 20 years but will come too late to help many first-time buyers, a think-tank has warned.
The Resolution Foundation said while an expected boom in household wealth would see inheritance windfalls soar in the years ahead, less than one in three would benefit.
Uncertainty about costs in retirement means older relatives will pass on wealth too late to help many in younger generations, with the typical age at which 20 to 35-year-olds are projected to receive an inheritance now at 61.
The think-thank found that just 32 per cent of people have benefited or expect to benefit from an inheritance or gift in their lifetime.
The value of inheritance is expected to double over the next 20 years but will come too late to help many first-time buyers, a think-tank has warned
Also wealthier families are twice as likely as the poorest fifth of the population to be recipients. Half of the richest fifth of earners are likely to receive a significant transfer of wealth, compared with just a quarter of the poorest fifth, the Foundation said.
The research was based on a survey of more than 8,700 people across the UK and funded by the Family Building Society.
Transfers of wealth can also have a significant impact on recipients’ lives, with a third of gifts are given to help with a property purchase. Some 6 per cent of homeowners say they would have been unable to buy a house without the extra money.
Passing wealth down also impacts the gift givers, with 16 per cent having saved more to pass money down, and 9 per cent having downsized their home or expecting to do so in the future.
Jack Leslie, senior economist at the Foundation, said: ‘A boom in household wealth over recent decades has led to expectations of a huge inheritance windfall.
‘But inheritances go to too few – and too late – to resolve Britain’s youth home ownership crisis, with just a third of people having received or expecting to receive an inheritance.
‘These wealth transfers often have a significant impact on the lives of recipients, enabling 1.6 million households to own a property that they wouldn’t have been able to otherwise.
Uncertainty about costs in retirement means older relatives will pass on wealth too late to help many in younger generations, with the typical age at which 20 to 35-year-olds are projected to receive an inheritance now at 61
‘But with the highest-income families twice as likely to be recipients as the lowest, the benefits are far from evenly distributed.
‘With many givers also changing their behaviour in order to facilitate those transfers, the impacts of transferring wealth are far-reaching.’
Sarah Pennells, finance specialist at Royal London, said the research showed no one could rely on an inheritance.
She said: ‘If an inheritance doesn’t materialise or it’s less than you expect, it leaves you little time to try and make up the difference with your retirement saving.’