Millennials facing challenging inheritance choices

Many older millennials would rather their parents used their money to fund a comfortable retirement instead of passing it on during their lifetime, new research suggests.

Almost a third (32 percent) of those turning 40 this year felt members of the older generation should hold on to their cash, while a similar percentage of their parents (31 percent) said they worried about funding retirement and care needs.

The UK-wide research, produced by wealth management firm Barclays Wealth, surveyed 2,000 people who turned 40 in 2021 or 2022; and 2,000 parents with children in the same age bracket. The parents all had assets of at least £1m, including property.

The overwhelming majority of the parents (99 percent) said they intended to pass on an inheritance to their children or grandchildren, with a considerable segment (37 percent) predicting they would hand out more money this year to help their children cope with high inflation and the cost-of-living crisis.

Commenting on the data Clare Francis, Director of Savings and Investments at Barclays Wealth, said: “Even though most children would be very grateful if their parents are able to pass on some inheritance while they’re still alive, they wouldn’t want them to have money worries in the future as a result.”

And, while family members may be keen to help each other, the financial outlook for all generations remains uncertain; with volatile markets affecting pension pots and property prices and the UK facing the longest recession since records began.

Ms. Francis added: “With finances being stretched in all directions, it can be incredibly stressful if you want to support your children in the short-term while making sure you don’t find yourself struggling further down the line.”

Against that stormy background, families need to communicate and forward-plan more than ever. Barclays’ research, however, suggests this is too often overlooked. Two in five (38 percent) of the parents admitting to failing to discuss inheritance plans with their children, while a quarter had no plan in place to protect their child’s inheritance should their offspring face a difficult divorce.