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Legacies to Peak in 2047 and Halve Within 15 Years…

According to a recent HSBC survey ‘The Age of Inheritance’, the average legacy received today is £46,000, although half of all people who inherit actually receive under £10,000.

Those in the 45-54 age group expect to inherit an average of £108,384, with nearly half of the survey participants having already done so. However, people aged 16-24 only expect to inherit an average of £45,662.

The average amount left as inheritance will increase to an all-time high of £238,000 in 2047 as people currently aged between 45 and 55 pass on their estates to their children.

In that year alone, £1.1 trillion is expected to be left to beneficiaries.  However, by 2062, when people who are currently under 34 retire, this number will have halved and dropped to £552 billion as inheritances are eroded by the rising cost of living and life expectancy (average inheritance of £155,000).

One of the key reasons cited for this dramatic decline is that the age at which people receive an inheritance is getting later, and is far less likely to be at a stage in their life when it is a priority to accumulate assets.  The evidence suggests that the older you are in receiving an inheritance the more of it you are likely to spend on goods and services which store no value – holidays are favoured amongst responders.

By comparison, younger generations were more likely to invest their windfalls or put it towards items that store wealth, such as property, the poll of 2,000 people found.

Over a third (36 per cent) of the population with parents still alive does not know if their mother or father have a will or how they plan to distribute their estate, according to research from NS&I.

Top 10 uses for a windfall*

  • Spend on essentials (34%)
  • A holiday or travel experience of a lifetime (34%)
  • Invest in a pension/long term savings (30%)
  • Buy / put the money towards a property (29%)
  • Pay off some/all of my existing mortgage (28%)
  • Spend on luxuries (23%)
  • Put aside for family events / needs (such as a wedding, first car) (23%)
  • Short term investment (12%)
  • Tuition fees (such as school fees or university) (10%)
  • Care fees (4%)

Regional Findings*

  • Londoners expect to receive the highest windfalls in the future (£136,365) and plan to leave the most as an inheritance (£269,207)
  • People from Yorkshire have received the highest windfalls to date (£87,799) 
  • People from the East of England are most likely to have received a windfall already (47%) and are also most likely to expect a future inheritance (31%) 
  • The Welsh are most likely to expect to be able to leave an inheritance (59%) however, they have also received the least to date - on average £15,162 per person 

 * source: "The Age of Inheritance" - HSBC, September 30 2011