Those aged 55 and over have, to date, received the highest proportion of inheritance and also collectively plan to leave the most, reveals a new report by HSBC.
Once this wealth has been passed down, forecasts suggest that the level of inheritance to be received in the UK by future generations is set to fall dramatically, as the value is eroded by the rising cost of living and life expectancy.
The Age of Inheritance Report shows that inheriting wealth is set to peak in 2047, with £1.1 trillion being left to beneficiaries.
This increasing longevity of the average Briton's life and the associated delay in leaving an inheritance is having a two-fold effect on reducing windfalls for future generations.
Living longer means more wealth will be used to simply meet the cost of living, and the age at which people receive an inheritance is getting later, and less likely to be in the life stage where it is a priority to accumulate assets and store wealth, such as reducing mortgage debt or long term investing.
The research shows the older you are in receiving an inheritance the more of it you will spend on disposable goods and services such as holidays and a more luxurious lifestyle.
David Wells, Head of investments, pensions and savings at HSBC comments "The findings of this report serve to highlight the importance of financial planning, both for those who plan to bequeath an inheritance and for those who are likely to be in receipt of one.
"Wealth needs to be carefully managed so that the value is not eroded before it can be passed down to future generations. Many of us will be reliant on an inheritance to achieve the lifestyle our parents have enjoyed."
Overall, two in five people have received a windfall in the past, one in four expects to receive one in future. Half of us expect to be able to bequeath an inheritance.
The average windfall received to date was worth £45,758, while the average future windfall expected is £88,237. For those who plan to leave an inheritance, the average value of the wealth they plan to pass down is £207,449.
Top ten uses for a windfall
1. Spend on essentials (34 percent)
2. A holiday or travel experience of a lifetime (34 percent)
3. Invest in a pension/long term savings (30 percent)
4. Buy/put the money towards a property (29 percent)
5. Pay off some/all of my existing mortgage (28 percent)
6. Spend on luxuries (23 percent)
7. Put aside for family events, such as a wedding or first car (23 percent)
8. Short term investment (12 percent)
9. Tuition fees for school or university (10 percent)
10. Care fees (4 percent)
Generational divide on spending or saving an inheritance
The majority of people who receive a windfall will invest it, put it towards family savings goals or simply use it to help pay for everyday essential living costs and pay off debt. However, more than half would also use a windfall to fund luxuries such as going on the holiday of a lifetime.
It is older inheritees who are more likely to spend their wealth on travel, luxuries and the rising cost of living or care fees as they live longer than any generation before them. By comparison, the younger generations are more likely to invest their windfalls or put it towards items that store wealth, such as property.