TikTok’s financial influencers promise, “This is how you retire early.” However, the life hacks provided do not include the most important advice: choosing the right parents. For, looking to the future, inheritance will determine who will gain a significant difference between the carriage clock and the Grim Reaper, and who will not.
Household wealth in the UK has soared in recent decades, totaling more than £15 trillion, while wealth inequality is twice as high as income inequality (official statistics show (And that was before we realized that we had undervalued our assets by £800bn). The wealth gap between young and old is also widening, with home ownership rates among young people plummeting, while a staggering 1 in 6 baby boomers now own a second property. I am doing it.
Importantly, these assets do not disappear when the owner dies. Bequests will double over the next 20 years, ushering in an inheritance boom. Over the next few years, our household finances will be shaped not by how hard we work, but by who our parents are, so we’ll see how fair Britain is and how we feel. We are faced with a huge challenge.
We’re focusing on what this means on the housing front with Mom and Dad’s Bank. Almost half of first-time buyers in their 20s receive some form of financial assistance, primarily from their parents. But we’re overestimating how much inheritance can solve the trauma of homeownership for younger generations, as 61 is likely to be the most common age for millennials to inherit. It’s too late to fund a family home, but it means we’re missing the big story: inheritance will increasingly determine when and how comfortably we can retire. Probably. Inheriting an average home is equivalent to 10 years less working at an average wage, creating a new kind of deep inequality. Need a smart retirement plan? Choose your parents carefully.
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Thorsten Bell is Labor MP for Swansea West and author of ‘Britain’? How we can reclaim our future
