Young Australians may be vastly overestimating the amount of inheritance they expect to receive.
A new survey from wealth management firm Colonial First State (CFS) found that younger Australians between the ages of 18 and 29 anticipate an inheritance of around $525,000.
The survey, which spoke to 2,250 Australians over the age of 18, found that young people's expectations were in line with those aged 40 to 49, who expected to inherit around $547,667.
"Young people are hopeful about receiving financial support in the form of an inheritance due to rising living costs, stagnant wage growth and housing pressures," CFS chief executive Kelly Power said.
The survey found that more younger people are expecting an inheritance, as housing affordability means many struggle to get onto the property market. Source: AAP / Dan Himbrechts
With trillions of dollars expected to be transferred via intergenerational wealth over the coming years, the data on who will receive that inheritance shows that younger Australians' expectations may not match up to the reality.
Where will 'the great wealth transfer' go?
A Productivity Commission report from 2021 found that $1.5 trillion in wealth had been transferred in Australia in the past two decades, with around 90 per cent of that total in the form of inheritance. Some estimates suggest that $3.5 trillion more could be handed down in the coming decades.
Economists call this 'the great wealth transfer'.
However, younger generations aren't always the beneficiaries. Melbourne University's HILDA survey of household, income and labour dynamics found that most recipients of inherited wealth are over 55, receiving an average inheritance of $275,619.
Matt Grudnoff, senior economist at the Australia Institute, says that young people are relying on an inheritance to get into the property market, a need "born out of desperation".
Baby boomers hold $4.9 trillion in assets according to CoreData analysis. Source: SBS News
Grudnoff said it's true that people tend to overestimate their inheritance, making guesses "based on hope and not reality".
The Australian Council of Social Service 2024 Inequality Report found that income inequality is growing in Australia as the wealthiest 10 per cent of households possess 44 per cent of total wealth. Further, older households are more likely to have more wealth, with households aged 65+ being four times wealthier than households aged 35 and under.
Adjusting inheritance expectations
While there is no official data to confirm just how much wealth is being passed down, the Productivity Commission estimates the average inheritance is around $125,000.
The HILDA survey also found that inheritances tend to be smaller for younger generations. It estimated that only 1.5 per cent of Australians between the ages of 25 and 34 received an inheritance, at an average amount of $50,508.
"Inheritances are not going to be that large for most people," Grudnoff said.
"It might help you in your retirement, but I don't think it's going to radically change whether or not you can buy a house or help you through most of your life."
The CFS survey also found 82 per cent intended to leave an inheritance but only 38 per cent have a will.
CFS head of technical services Craig Day said it's important that expectations are discussed openly among family members.
"By having these conversations early, families can ensure that everyone is on the same page and can make informed decisions that align with their values and goals," he said.
"It's not just about passing on wealth — it's about passing on clarity. Families need to talk about their intentions, their needs, and their plans."
