Inheritance inequality rife as well off receive the most
Research published by the Institute for Fiscal Studies (IFS) found that the wealth of elderly households (those aged 80+) has increased by 45%, mostly owing to higher homeownership and rising house prices.
As a result, the richest half of elderly households hold 90% of the wealth and the richest 10% hold 40% of the wealth, meaning a ‘lucky half’ of younger generations look likely to benefit the most.
Nearly three quarters (72%) of these households now expect to leave an inheritance, up from 60% a decade ago and it seems younger generations are much more reliant on bequests.
Of those born in the 1970s, 75% have received or expect to receive an inheritance, compared with 61% of those born in the 1950s and less than 40% of those born in the 1930s.
But the report revealed large inequalities in inheritance as with those born in the 1970s, 90% of the top-income fifth have received or expect to receive an inheritance compared with 60% of the lowest income fifth.
As such, the report’s author said that within each generation, those who are already well off tend to inherit the most.
Andrew Hood, author and senior research economist at the IFS, said: “The wealth of younger generations looks set to depend more on who their parents are than was the case for older generations.
“Today’s elderly have much more wealth to leave to their children than their predecessors did, primarily as the result of higher homeownership 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 homeownership for that group, the dramatic decline of defined benefit pensions in the private sector and the stagnation in their incomes.”