Rich Will Get Wealthier As Families Leave Big Inheritances

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If you already have some money, then the likelihood is you will be left more by your family, according to new research.

Despite successive generations becoming financially better off than those before, the chances are if you have money you will become richer when your relatives die.

The result is financial inequality persists across generations and people are less socially mobile because they cannot afford to compete with those that are wealthier.

This shocking indictment of how the wealthier become richer comes from a think-tank report produced by the renowned Institute for Fiscal Studies (IFS).

Author Andrew Hood said: ““The wealth of younger generations looks set to depend more on who their parents are than was the case for older generations.

Elderly have more money to leave

“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.”

Research revealed that the wealth of those aged 80 plus has increased by 45% compared with previous generations, mostly due to rising housing prices.

Almost three-quarters expect to leave an inheritance compared with 60% a decade ago.

The youngest generations are likely to inherit the most – 75% born in the 1970s expect money in a will, compared to 61% born in the 1950s and 40% born in the 1930s.

Luck counts more than hard work

But, says Hood, those who are already well-off are likely to benefit the most.

He pointed out that 50% of the richest elderly households control 90% of the country’s wealth, with the wealthiest 10% holding 40% – and their ‘lucky’ children and grandchildren will inherit the most.

The research also indicates that younger people earning the highest incomes can expect to be left more wealth than the poorest.

“Both low- and high-income households in younger generations are more likely to inherit something than their predecessors. In fact, the lowest-income fifth of those born in the 1970s are more likely to have received or expect to receive an inheritance than the highest-income fifth of those born in the 1930s,” says the report.