People aged 55 to 64 are most likely to receive an inheritance

A recent government publication based on the analysis of data from the Wealth and Assets Survey between 2014 and 2016 looked into intergenerational transfers such as inheritances, gifts and loans. The report attempts to address whether inheritances and gifts are received predominantly by those who are economically more advantaged, by what age groups, how people spend their inheritance and from whom they are most likely to inherit from.

Inheritance

The report looks at how recipients of inheritance vary across income distributions and observes that people with lower income or wealth are slightly less likely to receive an inheritance. After dividing the population up to five “quintiles” based on their income or wealth, the data shows that only 1% of those in the lowest wealth quintile received an inheritance of the value of £1,000 or more, compared with 7% in the highest quintile. There was also a significant difference between the lowest and the highest segment based on the amount of money they inherited.

An average person now is most likely to inherit when they are between the age of 55 and 64. The inheritance of 55 to 64-year-olds is also expected to be the highest in value. People inherit the most money from their spouses: The median value of inheritance from a spouse was at £80,000, while it was much lower, £22,000, from a parent.

When they receive their inheritance, 49% of the overall population save it or invest it. This percentage is higher for those above 55 and smaller for those below 34. Correspondingly, around one-third of those aged 16 to 34 and 35 to 54 years spent at least some of their inheritance. This was compared with approximately one-quarter of those aged 55 years and over. This highlights that older generations are possibly saving for their retirement and inheritance. 7% of first-time buyers used inheritance as a source for deposit.

Gifts and loans

On average, individuals with the most income and wealth are likely to receive the most substantial gifts and loans. Interestingly, the age group with the largest percentage who received a cash gift or loan was those aged 25 to 34 years, of which 11% did. By comparison, just 1% of those aged 65 years and over reported receiving a gift or loan. Among 16 to 34-year-olds, those with the highest income are the most likely to receive gifts and loans. In addition to receiving larger gifts and loans, what they receive is likely to take up a larger proportion of their wealth.

The report also points out that 25- to 34-year-olds are also the age group most likely to become first-time buyers and most likely to have children, which may suggest that such gifts and loans are given to help support these expensive life stages.

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