Millennials expect to inherit £1.2 trillion in the next 30 years, with over 11 million people aged between 25 and 45 in the UK expecting to receive some inheritance from their parents or grandparents, according to a report by Sanlam UK.
The Generation Game report shows that almost half of those (5.1 million) are expecting to inherit at least £50,000 in fixed assets or money. Out of the 5.1 million, the mean average value of the inheritance expected is £233,000, which equates to £1.2 trillion. However, four in 10 (38 percent) of this group have not spoken to the person they hope to receive the inheritance from, perhaps indicating a difference between expectations and reality.
Despite this, 34 percent said that they will rely on their inheritance for their future financial security, while 31 percent admitted to putting off saving and “living in the now” because they are expecting a large inheritance, suggesting that they could end up being over reliant on their expected windfall.
Perhaps reflective of their generation’s more financially precarious position, the report also finds a large number in this group will be relying on inheritance to pay off debt. Paying off debt (24 percent) was the third most popular stated use of inheritance, only purchasing a property (34 percent) and saving or investing came higher (38 percent). Other uses included setting up a trust (23 percent), starting a business (15 percent), and using it to retire early (17 percent).
The report also found that 81 percent of beneficiaries expect to receive money, while half (51 percent) assume they will receive fixed assets of some kind. A further 16 percent said they expect to inherit a business that their family member owner or part-owned, while 15 percent said they will be receiving the heirlooms of significant monetary value.
Sanlam UK chief executive, Jonathan Polin, said: “Our report highlights the scale of intergenerational wealth transfer that the UK is set to see over the next few decades. This level of inheritance is unprecedented, and its transfer presents both opportunities and challenges for the financial services industry and society more generally.
“Clearly, the recipients of this wealth are relying on their inheritance to act as a financial panacea. That said, overreliance on inheritance could be risky, especially if it affects the younger generation’s level of engagement with savings and investments today. As a first step, families need to have full and frank conversations about inheritance – this will help ensure younger generations have a realistic expectations of what they are to receive and can prepare accordingly.”
The report looks at the intergenerational wealth transfer expected to take place in the UK over the next 30 years and comprises research of three different groups: over-55s with investable assets of £100,000 who are leaving their children and grandchildren inheritance; people aged between 25-45 who are expecting to receive at least £50,000 in inheritance; and 200 UK-based independent financial advisers.
Sanlam UK, part of the South African based financial service group Sanlam Ltd, provides a range of services to over 10 million clients globally, including insurance, financial planning and investments, and controls over £13 billion in client assets.
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