Average inheritance hits £11,000 - and those aged 55 to 64 are most likely to receive one

30 October 2018
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People approaching retirement are most likely to be handed down wealth and receive the largest inheritances, official figures show.

Inheritances become more common as individuals get older, with those aged 55 to 64 years the most likely to benefit, according to new figures from the Office for National Statistics.

The ONS analysed data from its Wealth and Assets Survey data covering July 2014 to June to 2016.

It found that the average inheritance across all age groups is now £11,000.

Those age 55 to 64 also had the highest average value of inheritances over the value of £1,000, receiving on average of £33,000.

The second-highest value was for those aged 65 years and over, who received £20,000 on average.

This was compared with £4,000 for those aged 16 to 24 years and £5,000 for those aged 25 to 34 years.

Average amount received in inheritances of the value of £1,000 or more in the last two years by age 

: Median amount received in inheritances of the value of £1,000 or more in the last two years, by age

Alistair McQueen, head of savings and retirement at Aviva, says: “For many, an inheritance may be seen as a lifeline to carry them through retirement. But the boost is heavily determined by your current wealth status. The wealthier you are, the more you are likely to receive.”

“For some, an inheritance may transform your life in retirement. But not for all. Don’t put all your retirement eggs in the inheritance basket.”

Gift giving

By contrast, gifts and loans are most commonly received among younger people, highlighting the rise in the Bank of Mum and Dad.

The data shows that 11% of those in the 25 to 34 age bracket had received a gift or loan above £500 in the last two years. The average gift or loan across all age groups was £2,000.

This is also the age group who are most likely to become first-time buyers and have children, which may suggest that gifts and loans are being given to help support these expensive life stages.

Percentage of individuals who received an inheritance of the value of £1,000 or more, or a gift or loan of the value of £500 or more by age

Percentage of individuals who received an inheritance of the value of £1,000 or more, or a gift or loan of the value of £500 or more, by age

Steve Wilkie, managing director of lifetime mortgage specialist Responsible Life, says: “It’s no surprise the 25 to 44 years olds are the most likely to receive a gift or loan from a family member. These are the people trying desperately to get on the housing ladder but struggling to save for a deposit with stagnating wages, high rental costs and the rising cost of living.”

He adds: “Their grandparents were the generation who were told they ‘never had it so good’ and they want the same things for their children and grandchildren.”

Use of inheritance

The most popular use of inheritance for all age groups was to save or invest it, with 49% reporting doing this.

However, the proportion who did this was slightly higher among those aged 55 years and over, with 53% doing so, compared with 44% of those aged 16 to 34 years.

Meanwhile, the proportion of those spending at least some of their inheritance was higher among younger age groups.

Around one-third of those aged 16 to 34 and 35 to 54 years spent at least some of their inheritance, compared with around one-quarter of those aged 55 years and over.

Those aged 35 to 54 were also most likely to use some of their inheritance to pay off debts, with 12% reporting this.

This was compared with 8% of those aged 55 years and over and 5% of those aged 16 to 34 years.

Steven Cameron, pensions director at Aegon, says: “It’s positive to see that to some extent the younger generation are also benefitting from the transfer of wealth, but the benefits to younger generations of intergenerational transfer of funds should not be underestimated”

He adds: “This can play a vital role in kick-starting positive savings habits among the next generation or help them to get on the housing ladder.”

Inheritance tax overhaul

Commonly known as the ‘death tax’, inheritance tax is a tax on the estate – property, money and possessions – that is paid when someone dies. It is payable when the assets of an estate total in excess of £325,000. Any assets above this amount are liable to a tax of 40%.

Widely loathed by the middle-classes, there have been frequent calls for the tax to be overhauled in recent years.

Rachael Griffin, tax and financial planning expert at Quilter says the policy needs a rethink.

Ms Griffin says: “In 2018 people are living longer and retired households are at historic highs in terms of the wealth they hold relative the working-age population. One way to ease the pressure on the younger generations is to allow wealth to filter down more easily.”

She adds: “The annual IHT gifting allowance is living in the past, having been frozen since 1981. Had the annual allowance tracked inflation, it would be permissible to gift £10,932.20 per tax year in 2017, according to the Bank of England inflation tracker.”

Comments

In reply to by anonymous_stub (not verified)

Not at all surprising, The irony is that people in their 50s are most likely to receive a large inheritance just as they reach peak salary and pay their mortgage off.

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