Author Mark Fairlie
Millennials are set to receive a windfall in their later years thanks to the largest inheritance boom of any pre-war generation.
Because of the “luck of the baby boomer generation”, those with parents or grandparents born between 1946 and 1964 will be left record-breaking sums of inheritance, says the Resolution Foundation.
But many fear the money will come too late to make a differdeence with millennials not due to receive their inheritance until an average age of 61.
The generation gap
Additional research from the think-tank has discovered that less than a third of millennials owned their own home at 30 years old, compared with 55% of baby boomers.
Rachel Hosie, a 25-year-old lifestyle writer for the Independent, says the situation for millennials is completely different to that of baby boomers when they were the same age.
Due to large student debts, unguaranteed pensions, and an unstable economy when entering the world of work, she believes the inheritance boom will not be able to solve their current struggles.
Hosie said “we were really told for a lot of my generation that if we were ambitious and worked hard then we’d get a good job after studying hard, then we’d earn money and be able to buy a house and settle down – and we’d have this life that we saw a lot of our parents have, and now we’re struggling.”
But, according to Resolution Foundation analyst Laura Gardiner, millennials will “have the good fortune to benefit from the luck of the baby boomer generation.”
Only 38% of adults born in the 1930s received any kind of inheritance, yet almost two-thirds of young adults now have parents who own property.
Homeownership rates soared rapidly following the Second World War, peaking at 75% among baby boomers. Collectively holding more than 50% of all the wealth in Britain, this generation acquired high-value assets before the housing crisis.
“Typically, the down payment is the biggest hurdle for a homebuyer,” says Ken Fears, director at the National Association of Realtors. And with young adults currently spending more than half of their income on rent and bills, coupled with twice the rate of inflation faced by their parents, saving for a deposit is an impossible goalpost for many millennials.
‘Inheritance is not the silver bullet to get millennials onto the housing ladder’
Despite the record-breaking levels of inheritance set to be left to them, it is unlikely millennials will receive the money at the time they need it most.
“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,” says Gardiner.
Based on the age and rising life expectancy of baby boomer parents, the average age at which millennials will receive their inheritance is 61 years old.
Researchers have also found that the wealth will not be evenly distributed. Of those whose parents are homeowners, more than 80% already own their own property. Because of this, the ‘inheritance boom’ will have little to no impact on resolving the housing crisis.
Editor of Gransnet, Cari Rosen, also stated that there may not be any inheritance to leave behind.
Despite the financial success of the baby boomer generation, Rosen points out that “half of women and a third of men are going to have to pay for care at some point,” and that “one in four people who pay for care runs out of money.”