It isn’t easy being young these days. Many graduate with debts totalling tens of thousands of pounds, while wages have stagnated for years.
Sky-high house prices mean the first rung of the housing ladder is out of reach for many, while rents soar.
It’s a different story for so-called baby boomers, those born in the years after the Second World War who are now in their 70s.
Many – although by no means all – have benefited from rocketing property values, final salary pensions and the great stock market bull runs of the 1980s and 1990s.
Unfairly, baby boomer has become a term of abuse among some younger people, who complain that they lack the same opportunities.
In their defence, wealthy boomers are keen to pass on their good fortune to their children and grandchildren, but there is a problem.
Many will not be able to do so.
Parents and grandparents fear their inheritances will now be eaten up by inflation and social care costs.
Baby boomers are going bust.
That’s bad news for them and an even bigger blow for any children who were banking on getting a cash windfall when they die.
Two in five Britons aged from 55 to 85 who have £50,000 or more in investable assets say they would like to pass on wealth to loved ones.
The average transfer is a hefty £192,000 yet almost two thirds fear that today’s brutal inflationary spike will erode the value of their retirement savings.
The cost-of-living crisis will further deplete their pots as they are forced to withdraw money to cover everyday essentials, or clear mortgages and other debts.
More than half fear that they will have to use the money to fund social care costs either for themselves, their partner or parents.
This will make passing on wealth harder both for those who plan to transfer money when they die or make so-called “living inheritances” while still alive.
It will also come as a major blow for the younger generation of whom 40 percent admit they are relying on a decent inheritance to safeguard their financial future, according to the research from St. James’s Place.
Claire Trott, the advisory group’s divisional director for retirement and holistic planning, said younger generations are dependent on the “great wealth transfer” from baby boomers. “Unfortunately, many are concerned about how today’s inflationary backdrop will affect their plans.”
Other issues such as living for longer and the cost of funding care in later life need to be factored into plans too, Trott said.
“With so many people relying on receiving wealth, concerns around being able to pass on less than originally planned are growing,” she added.
READ MORE: That’s not a house price crash. Just wait until prices plunge 30%
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt are keen to grab their share of baby boomer wealth, in the shape of inheritance tax (IHT).
While only one in 20 estates pay inheritance tax (IHT) today, that is rising steadily as Hunt has now frozen IHT thresholds until 2028.
HMRC expects to take a record of £7billion worth of IHT this year and that will rise steadily in future.
Middle income families bear most of the burden while very wealthy typically escape through sophisticated tax planning.
At least the taxman is benefiting from boomer wealth. Their children may see less of it than they expect, and shouldn’t rely on an inheritance solving their money worries.
Their parents need that money today.
Beat the taxman at his own game: Your guide to inheritance tax – from what it is to how to reduce it
