Recently, various news channels reported on a study carried out by an independent Think Tank, Resolution Foundation. The basis of the study was how the millennial generation will inherit more than earlier generations.
It estimates that inherited money has doubled over the past twenty years and is predicted to double again over the next two decades.
Most people will be extremely pleased that their hard work and savings will be passed on to their children. However, the report highlights that such inheritances are probably going to be received too late to help the millennials really benefit when the money is most needed e.g. When buying their first home or starting a family. Indeed, the Think Tank estimate’s that when taking into account the age and life expectancy of their parents, the average age to inherit will be 61.
This startling fact got me thinking. If the millennials are facing this now, how much older will our own children be when they inherit.
So rather than accumulating our own wealth and waiting to pass it on when we are no longer here, is there anything we can do during our lifetime? Of course, we all still have the bills to pay and our family holidays to enjoy but it is worth taking a step back and thinking what small changes you can make for their future benefit. For example, using a junior ISA allowance which is £4,128 this year (£4,260 for the 2018/19 tax year) could help with the purchase of a property when they go off to university. This would have the benefit of a place to live whilst studying but also that first step on the property ladder and giving you the comfort of knowing they are on the right path whilst you are still alive to see it.
The value of pensions and investments can fall as well as rise, you may get back less than you invested.
To discuss financial matters please get in touch Citrus Financial.
Author: Helen Loder
Co-Director of Sevenoaks Mums