Just: Many overestimate actual amount of inheritance

Ryan Fowler

October 16, 2019

Adults are expecting to receive an average inheritance of £132,000 with many relying on the cash to take their first steps on the property ladder, according to Just group. 

But the retirement specialist has warned that reality could be a big shock as ONS figures suggest the median inheritance passed down by parents in the past two years is much less, at £30,000 (overall mean £50,000).

The youngest generation has the greatest expectations of inheritance with 18-34 year olds saying they expect to receive or have received £151,000, and those in the 35-54 age bracket anticipating a similar amount (around £148,000).

Over 55s, who are more likely to have already received inheritance money from their parents, said they expected or had received £98,000 – less than the younger cohorts, but still a long way over official figures for their age group (c£39,000).

Stephen Lowe, group communications director at Just Group, believes the disparity between expectation and reality highlights the importance for families to find ways to discuss their financial situation and the realities facing them in later life.

He said: “The rise in house prices over the last few decades seems to have left younger people pinning their hopes on receiving an inheritance windfall to help them join the property market, but the mismatch in expectation versus past reality may leave many people disappointed.

“As people live longer, they will need to fund more years of retirement – which may include paying for social care. So, it’s surprising that people are quite so confident in the size of inheritances they expect to receive.

“Families tend not to talk about money and death. But if we don’t talk about these themes it becomes very hard to make practical plans – be that getting onto the property ladder or preparing for care in later life.

“It might not feel comfortable to broach these subjects but it’s better than misunderstandings and disappointments later. It really is good to talk.”

Over-estimating the amount of money that will be passed down from parents could be a major hurdle impacting people’s property aspirations. 98% of people under 40 who expect an inheritance say it will be important in helping them buy their first property.

For some, however, their expectations of receiving an inheritance are rather bleaker. Across all age groups more than half (57%) do not expect to receive an inheritance.

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