A report from the Resolution Foundation has revealed that the total value of inheritances in the UK is set to double within the next 20 years. Inheritances will peak in 2035, which will come as good news for the Millennial generation as they are the ones who will benefit as the baby boomers move into old age. Many of those currently in their twenties and thirties will be able to enjoy the largest and most wide-reaching inheritance windfall of any post-war generation, with as many as two-thirds set to inherit property from their parents.
In contrast, most people born into the baby boomer generation had parents that tended to live in rented or social accommodation, so property inheritance was typically passed down to just 38%.
The majority of the baby boomer generation are homeowners, with the figure currently standing at 75%, meaning it’s clear that their Millennial offspring are in line to receive a share of their parental home - but not until they themselves near retirement age. This is because we are living longer, and the average age at which most people lose their parents is getting later. Those aged 25-35 are expected to reach an average age of 61 before receiving any inheritance, according to official data from the Resolution Foundation.
The report goes on to say that due to the challenges involved with releasing wealth from properties that are being lived in, it can be reasonable to expect that the assets will mainly be passed down to the next generation as inheritances, rather than as gifts.
This means that positive news for Millennials will also come with a gentle reality check, as the wealth boosts many are set to receive will not come during the years when it may be most useful. For most, the child-rearing years, when a larger home is typically more necessary, won’t be the time that the benefits can be capitalised upon. Instead, those who are in line for property inheritance will likely have to wait for the wealth boosts until they are approaching retirement age.
Furthermore, others in the industry have argued that many Millennials who are not homeowners are unlikely to receive one from their parents. This is because figures show that almost 50% of Millennials who do not own property have parents who also do not own property.
Industry insiders claim that growing absolute wealth gaps will surely make it more difficult for people to earn their way towards being financially wealthy, as opposed to achieving it based on what their parents owned.
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