Britain's savings gap £27 billion a year

This may help to reduce the savings gap, but it does not mean people can forget about saving for retirement.

The amount of housing wealth inherited is expected to double in the next 15 years, reflecting demographic changes and the death of the first mass generation of homeowners. Housing wealth will undoubtedly help the next generation to provide for their pension. But it does not by any means reduce the need to save for the future – including making provision for retirement.

In 1946, when the first post-war baby boomers were born, only 31 per cent of households owned their own homes. By 2001, this had increased to 70 per cent. During this time property values have increased hugely.

Nationwide building society says that in 1952 the average house cost £1,891, compared with £158,745 at the end of 2005. Baby boomers have benefited hugely from house-price inflation – over the past 20 years prices have risen by 359 per cent, according to the Halifax.

Halifax Financial Services calculates that the value of housing assets inherited every year will more than double over the coming 15 years. In the 2002-03 tax year £14 billion was passed down and this is expected to rise to £32 billion by 2019-20.

This may help to close the savings gap – the shortfall in what we should be putting away for retirement – as younger generations inherit the wealth tied up in their parents’ and grandparents’ properties. The Association of British Insurers says the savings gap is £27 billion a year.

Research from Bradford & Bingley reveals that a third of 30 to 50-year-olds feel they do not have spare money to save. And only a fifth of people in that age group are putting enough aside for their old age.

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