By Verena Vogt
Inheriting wealth is the only reason why people born in the 1960s and 70s will be better off than their parents at retirement, according to new research.
The study by the Institute for Fiscal Studies (IFS) found that those born between 1960 and 1979 are much more likely to receive an inheritance than earlier generations.
Some 70 per cent of people born in the late 1970s are likely to inherit, compared with 28 per cent of those born in the early 1940s.
Smaller private pensions
However, they will be less likely to own a home, have no higher income and will have smaller private pensions than the older generation, the IFS found.
In real terms, the incomes of adults born in the 20 years after 1960 are no higher than those of older people when they were the same age 10 years ago.
The IFS explained that those born after 1960 had higher incomes in their younger years, but also spent more and as a result have no more savings than those born in the 1940s.
The institute added that the move away from final-salary pension schemes to less-generous money purchase plans had affected the post-1960s generation.
When they claim their state pension it will make up a smaller proportion of what they earned previously.
Younger generation need longer to buy first home
The younger generation also needed longer to buy their first home, and overall home-ownership rates have fallen to around two-thirds.
This is compared with a high of four-fifths among those born between 1940 and 1959.
It was also found that inherited wealth will be spread unevenly, with those who are already among the wealthiest set to receive the most when they receive an inheritance.
Andrew Hood, one of the report's authors, said: "Since the Second World War, successive cohorts have enjoyed higher incomes and living standards than their parents.
"Yet the incomes and wealth of those born in the 1960s and 1970s look no higher than the cohorts who came before them.
Younger generations to rely on inheritances
"As a result, younger cohorts are likely to have to rely on inheritances to be better off in retirement than their predecessors.
"But inheritances are unequally distributed, with households that are already relatively wealthy far more likely to benefit."