New research has revealed young people are likely to inherit more than previous generations – with those who are already well off benefiting the most.
Leading think tank the Institute for Fiscal Studies (IFS) has found that in the 10 years to 2012-13 the wealth of elderly households increased by 45%, mostly as a result of higher home ownership and rising house prices.
Some 72% of these households – in which all members are 80 or older – now expect to leave an inheritance, up from 60% a decade ago, with a particularly sharp increase in the proportion expecting to leave a large inheritance.
As a result, younger generations look much more likely to benefit than their predecessors.
The study established that of those born in the 1970s, 75% have received or expect to receive an inheritance.
This compares with 61% of those born in the 1950s and less than 40% of those born in the 1930s.
But the IFS data shows future inheritances are likely to be highly unequal.
Even excluding the super-rich – for whom there are no reliable numbers – the richest half and 10% of elderly households hold 90% and 40% of the wealth respectively.
This means a “lucky half” of younger generations look likely to get the vast majority of inherited wealth.
The research also reveals the largest inheritances tend to go to those who are already well off.
Among current pensioners, more than half of those with families well enough off to leave them more than £250,000 in inheritance have lifetime incomes (excluding inheritances) in the top 20% of the population.
Senior research economist Andrew Hood, who worked on the study, said the wealth of younger generations would likely depend more on who their parents were than was the case previously.
He added: “Today’s elderly have much more wealth to leave to their children than their predecessors did, primarily as the result of higher home ownership rates and rising house prices.
“At the same time, today’s young adults will find it harder to accumulate wealth of their own than previous generations did, due to the sharp fall in home ownership for that group, the dramatic decline of defined benefit pensions in the private sector and the stagnation in their incomes.”
