Millennials will receive the biggest ‘inheritance boom’ of any post-war generation, but only when they are approaching retirement, analysis by a respected think tank has found.
According to the Resolution Foundation, millennials - those currently aged between 17 and 35 - are set to benefit from inheriting property wealth from their parents, the so-called baby boomer generation. Almost two-thirds of young adults have parents that own property.
But for many it will come as too little too late, as a typical millennial will not receive an inheritance until they reach the age of 61.
The Resolution Foundation says inheritances are set to more than double over the next two decades and peak in 2035. This will be driven by the fact that baby boomers, who collectively hold more than half of Britain’s wealth, pass on assets to their children upon death.
But despite receiving record amounts of inheritance it will be too late and too unequally shared to solve the generation’s home ownership and wealth inequality woes, the report found.
Baby boomers, defined as those who were born from the end of the Second World War all the way up to the mid-1960s, have been the big winners from soaring house prices. The losers, on the other hand, are quite often their own offspring, who have to save tens of thousands of pounds for a deposit in order to get their first foot on the property ladder. For many millennials, home ownership is out of reach given young adults pay over half of their income on rent and bills. They are also faced with twice the rate of inflation of older generations.
While it’s true that baby boomers have faced their own challenges, including rampant inflation in the 1970s, huge increases in house prices have opened up a big generation divide, with the Resolution Foundation pointing out that millennials are only half as likely to own their home at 30 as baby boomers were. In addition, millennials have accumulated less wealth (property, financial assets and private pensions) than their predecessors had at the same age.
Laura Gardiner, senior policy analyst at the Resolution Foundation, notes that while millennials are in line to benefit from ‘the luck of the baby boomer generation’ the inheritance boom should not be viewed as the answer to the systemic intergenerational inequality in the UK.
She adds: ‘Inheritance is not the silver bullet that will get a whole new generation on the housing ladder or address growing wealth gaps in society. Even for those millennials who will receive a bequest, it’s unlikely to come when they’re coupling up, having children, and trying to buy a family home when the extra wealth would be much needed, but as they approach retirement instead.
‘These are big and complex shifts, but our national debate and our public policy have a long way to go to catch up with the fact that wealth and inheritance have grown significantly as features of modern Britain. It’s time they did.’