Millennials think they’ll inherit £130,000 each. Is this accurate?

Inheritance tax receipts are hitting record highs today. Does that mean Millennials are set for huge inheritance payments?

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The older generation is often thought of as the ‘lucky generation’ when it comes to money. For example, many people in retirement today still benefit from ‘final salary’ pension plans in which their previous employers continue to pay them a substantial income years after they’ve retired. Then, there’s house price growth. Given that UK house prices have risen astronomically over the last 30 years, many older homeowners are now sitting on significant house price gains.

Naturally, this has implications for the younger generation and many Millennials today are confident that they’ll pick up a share of the spoils in the form of generous inheritance payments. Indeed, a recent survey by wealth manager Charles Stanley revealed that, on average, Millennials expect to receive an inheritance of nearly £130,000 each. But are young people actually likely to receive that kind of windfall? Let’s take a closer look at Charles Stanley’s study.

Way off the mark

While inheritance tax receipts are hitting record highs today, the bad news for Millennials is that their inheritance expectations are way off the mark, according to this study. For example, while young people are expecting to receive nearly £130,000 each from inheritance payments, the median amount handed down is currently only around £11,000. Moreover, while one in seven Millennials expects to inherit money before the age of 35, in reality, the typical inheritance age these days is between 55 and 64 because people are living longer.

Relying on an inheritance is risky

What these findings suggest is that relying on an inheritance payment to achieve your financial goals probably isn’t the smartest financial strategy. “People are living longer than ever, so relying on an inheritance to get on the housing ladder is a risky strategy as you may get less, and much later than planned,” said Charles Stanley’s John Porteous.

The smart strategy

The bottom line for Millennials is when it comes to achieving financial goals, saving and investing regularly remains the smartest strategy. Whether your goal is saving up for a house, or a building up a huge retirement savings pot, there really is no substitute for a regular savings and investment plan in which you tuck away a proportion of your income and invest the money in assets that boost your wealth over time.

One thing it’s important to realise in this regard is that you don’t need to have a lot of money or be earning a lot to start building up your wealth. For example, with Hargreaves Lansdown, you can start investing in funds with just £100. You can also set up a monthly direct debit investment plan from just £25 per month which is less than most people pay for their monthly phone bill.

The key, however, as with many things in life, is to get started sooner rather than later. The later you leave it to save and invest for the future, the less chance you have of achieving your financial goals.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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