18 April 2017

Harassed baby-boomers set to cascade a ‘wall of wealth’ from their parents to their children – Royal London

4 min read

Steve Webb
Royal London



New research from mutual insurer Royal London has found that over £400 billion in wealth being held by Britain’s grandparents is set to cascade down through the generations to the benefit of Millennials in the coming years.   

Although most of the wealth held by the grandparents’ generation will be passed on initially to their baby boomer children, the research finds that the majority of this group expect to pass some or all of this inheritance ‘straight on’ to the next generation. In many cases this is because they feel under pressure to do so, but also because they are aware of the needs of their Millennial offspring.

The data was collected for Royal London by YouGov who surveyed over 5,000 people from three generations – a ‘grandparents’ generation of 65-85 year-old homeowners, a ‘sandwich’ generation of 45-64 year-old baby-boomers, and a ‘children’s’ generation of 25-44 year-old Millennials. Each respondent had living family members in both of the other generations, and in the case of the 45-64 year age group and the 25-44 year age group, each had parents and/or grandparents who are owner-occupiers.

Each group was asked about their plans to bequeath money or their expectations of receiving an inheritance. Key findings included:

  • There is very little evidence that the grandparents’ generation is ‘spending the kids inheritance now’ – indeed, they are the group most focused on passing money on to the next generation; The survey finds that the typical wealth of home-owning grandparents is in the £400,000 - £500,000 range, and they plan on average to share this between four and five recipients;
  • The ‘sandwich generation’ (aged 45-64) feels more under pressure than their parents to pass on any inheritance, partly because they are more in touch with the challenges being faced by their Millennial children; over two in five of the sandwich generation said they feel pressure to pass on wealth, compared with just under one in five of the grandparents’ generation; a majority say that they will pass some or all of any inheritance ‘straight on’ to their children, with this proportion rising to around two thirds for the 55-64 age group; the sandwich generation expect their share of any inheritance from the grandparents’ generation to be around £160,000;
  • The children’s generation, whilst frustrated at the inequalities between the different generations, were not living their lives in expectation of an inheritance; but two in five had already received a lump sum from their grandparents and just over half had received a lump sum from their parents, most often to help with a deposit on a house or to pay towards a major event such as a wedding;
  • Attitudes to inheritance differed sharply between the generations; for example, 86% of Millennials wanted to see their grandparents ‘spend freely to enjoy their retirement’, but only 56% of the over 75s said that they want to be able to ‘spend freely’ on themselves in retirement. And in reality, the grandparents’ generation were largely preserving their wealth, with very few opting to free up cash via equity release, and few of those who had downsized using any cash freed up to spend on current consumption;

However, the Millennials set to benefit from this cascade of wealth through the generations are likely to be in the minority amongst their peers. The research finds that only around 4 million of the 17 million people in the 25-44 age group are in the fortunate position of having grandparents with housing wealth. The report argues that policies designed to help ‘generation rent’ need to focus more on those who will not benefit from inherited wealth. It points out that the Lifetime ISA, which adds £1,000 per year of taxpayer top-up to those who can save £4,000 will tend to reinforce the advantages of those who already have access to wealth and will not be of much benefit to struggling renters with no inherited wealth.

Commenting on the results, Royal London’s director of policy, Steve Webb said:

There is a wall of housing wealth set to cascade through the generations in the coming years. Grandparents still attach great importance to passing on their wealth rather than consuming it. Many in the next generation feel under considerable pressure to pass any inheritance straight on to their own children as they are acutely aware of the challenges faced by their Millennial offspring”.

“Those Millennials lucky enough to have home-owning parents and grandparents may be set to benefit from significant inheritance which will help them onto the housing ladder. But the majority of Millennials are not in that position. Schemes such as the Lifetime ISA which provide a government contribution of £1,000 per year for those who have £4,000 per year to save will tend to favour precisely those groups who already have access to wealth. There is a danger that this will reinforce the advantage of those who are set to benefit from a cascade of wealth from the older generations.

- ENDS –

For further information please contact:

Royal London Press Office

Notes to editors:

  • Royal London Policy Paper 12: ‘Will harassed baby boomers rescue generation rent?’ is available at: www.royallondon.com/policy-papers
  • Royal London commissioned YouGov to survey more than 5,600 respondents covering three generations. Participants were asked their plans about bequests and inheritance, and about their expectations of other generations. The research focused on three main groups:
    • A ‘grandparents generation’ aged 65 and over who have a home that they might pass on to children and/or grandchildren; around 4.5 million people in the UK would fall within this category;
    • A ‘sandwich generation’ of parents aged 45-64 who had living parents from whom they might expect to inherit as well as adult children who might be looking for support; around 7.7m UK adults fit this definition;
    • A ‘children’s generation’ of adult children aged 25-44 who have parents and grandparents living in owner-occupied accommodation; we estimate that there are around 4.2m people in this situation in the UK.
  • In order to ensure Royal London had a rounded view of this topic, YouGov interviewed four different generations between 1st February and 8th February 2017 to assess their attitudes.
    • 515 Millennials/early Gen X – classed as 25-44 with living parents and grandparents. Grandparents are homeowners
      • Split of 349 aged 25-34 and 166 aged 35-44
      • Spilt 50/50 on gender
    • 2,011 45-64s – have living parents and children. Parents are homeowners.
      • Spilt of 50/50 on both gender and age bands (45-54, 55-64)
    • 1,037 75-85s – homeowners with living children and grandchildren
      • Split of 50/50 on both genders and age bans (75-80, 81-85)
      • Due to limits of panellists in the age bank, these quotas were significantly softened during fieldwork to ensure the full completes
    • All respondents were sourced from the YouGov panel using pre-identified information to invite likely qualifiers
    • Data was not weighted due to the above stipulations

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.