Baby-Boomers Set To Pass On a ‘Wall of Wealth’

A recent research study1 shows that Britain’s grandparents hold over £400 billion in wealth. The bulk of this wealth has arisen as a result of the continuing rise in property values.

Elderly couples with homes will pass down on average property worth £400,000 to £500,000 to their offspring, with the money they leave behind set to benefit four or five recipients. Based on just over a million people who fall into this category, this equates to a substantial “wall of wealth”, much of which will be passed on to grandchildren, though with elderly care costs potentially eroding this in some cases.

Contrary to public opinion, there is little evidence that these grandparents are planning on spending their kids’ inheritance. In fact, they feel under pressure to help the next generations and are more focused on passing money on
than they are on consuming it themselves.

It seems that this cohort is acutely aware of the challenges faced by the millennial generation and is keen to help them with the big financial challenges in their lives, like getting onto the housing ladder.

Generation Rent Disadvantaged

Those millennials lucky enough to have home-owning parents and grandparents are in the fortunate position of being able to buy a property themselves. However, this doesn’t apply to all, and many who form part of what has been dubbed “Generation Rent”, may find themselves in this position for many more years than would have been the case a few years ago.

Since the early 2000s, high house prices, weak growth in real incomes and greater controls over lending have all combined to make home ownership harder, despite a long period of low interest rates, competitive mortgage deals and various government policies designed to help firsttime buyers. The number of 25 year olds who own their own home has more than halved in the last 20 years.

If you would like advice on how to pass your wealth on to the next generations, then do get in touch.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Not all Inheritance Tax Planning solutions are authorised and regulated by the Financial Conduct Authority.

1 Royal London, 2017

It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation, are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. The value of investments can go down as well as up and you may not get back the full amount you invested.

The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.