You are here: Home - Household Bills - News -

Young adults with wealthiest parents are six times better off than poorest

Written by:
Young adults with wealthy parents are around six times wealthier than those from the poorest families, according to analysis.

Research by the Institute for Fiscal Studies (IFS) found people with wealthy parents are much more likely to be wealthy themselves, to be homeowners and to be high earners.

When people born in the 1970s and 1980s were in their 30s, those with parents in the wealthiest fifth in their generation had an average net wealth – excluding pension wealth – of £107,000.

Those with parents in the poorest fifth had on average £18,000.

The children of wealthier parents are significantly more likely to be homeowners by the age of 30 – 65 per cent for those with parents in the top third of the wealth distribution against 56 per cent and 41 per cent for those whose parents were in the middle and bottom thirds, respectively.

Even among those whose parents have the same levels of earnings and education, those with wealthier parents tend to earn more.

And those with wealthier parents save more as a portion of their earnings and are more likely to hold higher-risk, higher-return investments such as stocks and shares, the research found.

David Sturrock, a senior research economist at the IFS, said: “These findings emphasise the importance of considering wealth – both as a resource that parents may use to transmit economic advantages to their children, and as a measure of the economic resources and security of young adults – when trying to promote social mobility.

“Policies that seek to improve educational progression and labour market outcomes for those with low-education and low-income parents could, if designed and implemented well, be important for wealth mobility but would not on their own equalise wealth outcomes between those with wealthier and poorer parents.

“A significant amount of the inequalities in wealth by parental background appear to be due to other channels through which parents transmit advantages to their children.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week