InvestmentsJun 28 2018

Millennials expecting £233k inheritance windfall

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Millennials expecting £233k inheritance windfall

Young people banking on an inheritance to shore up their finances need a better plan, advisers have warned.

Research from Sanlam shows some 64 per cent of people aged between 25 and 45 expect to receive an inheritance from their parents or grandparents.

Almost a third of these have put off saving and 34 per cent are relying on a windfall for their future financial security. The average amount expected is a hefty £233,000, with at least £50,000 expected.

But advisers say many could be walking into problems in the future as a result.

Pete Chadborn, director at Plan Money, says: “I think there’s a growing trend for those in their 20s and 30s to live for today and assume that an inheritance will solve future financial concerns. These sentiments are often coupled with retirees’ desire to leave a legacy but what both parties often overlook is the significant cost of long-term care and the ravaging effect this can have on estate values.”

The Sanlam UK Generation Game report showed passing wealth is between the generations was becoming increasingly common. Over 55s typically had £100,000 of investable wealth.

Meanwhile, young people are relying on inheritance to buy a property, start investing, to clear debt and even retire early themselves.

But with life expectancy increasing, advisers warned that young people needed to have their own financial plan or risk being unprepared.

Four out of 10 people aged 25 to 45 have not discussed inheritance with their older relatives, meaning there could be a significant mismatch between what they expect to receive and what they actually get.

Alistair Cunningham, director at Wingate Financial Planning, said: "A good proportion of today’s 60-year-olds will live into their nineties and beyond, which means a windfall for younger relatives is not guaranteed. It is very unwise to plan for a potential inheritance that could be spent, taxed or come much later than expected."