Baby boomers are busy spending their kids' inheritance

Sarah Coles
Happy senior couple drinking cocktail and toasting each other
Happy senior couple drinking cocktail and toasting each other

If cash-strapped Generation X is holding out for an inheritance to solve their money woes, then a new survey could bring very bad news indeed. The study found that one in six 50-70-year-olds are planning to spend every penny of their cash before they die - and leave nothing to their children.

The research, for Gransnet, has been reported in the Sunday Times, although no details have yet been given as to what the other five out of six have in mind.

This is likely to come as a huge blow to the children of those baby boomers included in the survey - many of whom had already factored an inheritance into their later-life planning, to cover everything from paying off the mortgage to funding retirement.

It reflects the findings of a study back in February, which highlighted that people in their early 40s expect an average inheritance of £180,217, and one in ten plan to fund their entire retirement from an inheritance. In reality, the study found, they were set for an average inheritance of £69,871.

Should they expect more?

The level of expectation comes down to the gulf in financial wellbeing between the two generations. Baby boomers often have final salary pensions. They also had the opportunity to buy affordable properties with small mortgages, and then pay them off relatively young, so that their retirement is relatively comfortable.

Generation X, meanwhile, are far more likely to have paltry defined contribution pensions, which will give them far less than they need to live on in retirement. One of the main reasons they have struggled to pay into these pensions is that for the vast majority of their adult life they have been saddled with enormous and unaffordable mortgages, which they have been struggling to pay down.

We perhaps should not be surprised that Generation X looks to their parents for help. They could be forgiven for thinking that it's more important for them to stay off the poverty line than for their parents to have yet another holiday.

Why should they leave more?

However, on the flip side, Baby Boomers have a strong point when they argue that they have worked all their lives and earned every penny, so they shouldn't feel duty-bound to pass the fruits of their labours onto someone else.

Many of them face the cost of care as they get older, and the rising cost of living, and while they may want to try to leave something to their children, they don't want to live a needlessly frugal lifestyle in order to do so.

Generation X, meanwhile, is arguably showing signs of a misplaced sense of entitlement. A study last year found that the number of adult children stealing from their elderly parents had shot up at the end of the previous year. It concluded that adult offspring were getting frustrated with waiting for their elderly parents to leave an inheritance, so decided to take matters into their own hands.

Hitesh Patel, UK Forensic Partner at KPMG, said: "People are living longer, and we are seeing examples of people who are choosing to remove uncertainties about when or if they will get their inheritance by fraudulent means. It's also likely these cases are just the tip of the iceberg – frauds of this nature often go unreported as embarrassed victims seek to 'keep it in the family' and 'forgive and forget'."

But what do you think? Are Generation X entitled to expect something from their parents, or should they be left alone to enjoy the money they have worked so hard for? Let us know in the comments.