Millennials face widening wealth gap amid shifting inheritance trends

Research indicates a significant wealth divide is emerging within the millennial generation. While those born in the 1980s and early 1990s are projected to be the highest-earning group by age 40 in real terms, their purchasing power is constrained by rising living costs and housing challenges.

Economic success is increasingly determined by parental support, often referred to as the ‘Bank of Mum and Dad’. While a quarter of millennials may inherit more than £280,000 through the ‘Great Wealth Transfer’, others face continued financial pressure from student loans and rising private rental rates, which have increased among 35- to 44-year-olds from 9% in 1997 to 28% today.

Furthermore, the anticipated transfer of wealth is being impacted by changing spending habits among older generations. Data suggests many baby boomers are opting to spend their disposable income on travel and leisure during retirement rather than preserving it for heirs. This trend, sometimes called ‘ski-ing’ (spending the kids’ inheritance), is driven by a demographic that is generally healthier, mortgage-free, and possesses increasing disposable income.