The Generation Game, a report on inheritance in the UK, found that at least five million people aged between 25 and 45 expect to inherit a minimum of £50,000 from parents or grandparents.
Researchers, who spoke to those over 55 who planned to leave money to children or grandchildren, those aged 25 to 45 who expected to inherit, and 200 independent financial advisers, also found the average inheritance was likely to be around £233,000.
Commissioned by wealth management company Sanlam UK, the research suggests we’ll experience one of the largest inter-generational transfers of wealth ever seen, one which comes at a time when the economy is struggling, and young people are finding it increasingly difficult to secure well-paid employment and get on the housing ladder. For some parents the decision to use a Equity Release Gloucestershire firm such as https://www.palmermortgages.co.uk/financial-services/equity-release-gloucestershire is fuelled by their desire to help their children make it on to the property ladder.
Expectations vs. reality
There is a caveat to this report, as research carried out into the expectations of those aged 25 to 45 also showed over half hadn’t spoken to those they expect to inherit from, meaning they might not end up with as much as they imagine.
With such large amounts at stake, there’s a risk millennials have built future plans around unrealistic expectations, leading them to live in the moment and not plan ahead. For example, approximately 30% of people surveyed said they’d use the money to pay off debts, rather than trying to pay them off now. Others said they would use the money to buy property, invest it, retire early, set up trusts, or start a business.
In many cases, these plans weren’t well thought out, and people set to inherit would benefit from independent financial advice, possibly from advisers using software to help them assess their options. For example, software could help lay out possible scenarios for what their financial future might look like. It would also help reduce the risks many millennials face from not understanding their financial situation and the impact any inheritance might have on their future.
With so many people relying on an inheritance to pay bills or give them a better life, the more planning that can be done the better, especially if the current economic climate continues. Without proper planning, millennials may find themselves in a difficult financial situation, even if they do inherit as much as they expect to.