Some €295 billion in wealth accumulated by “retired households” here is set to be transferred to family and others over the next couple of decades, according to a new report on inheritance and estate planning in Ireland by stockbroker Goodbody.
According to the Goodbody analysis, some €201 billion of this amount is tied up in housing, with another €51 billion on deposit, €20 billion in financial investments such as shares, bonds, etc, and €23 billion in business wealth. The stockbroker notes that the wealth figure for retired people is likely to continue to increase in the coming years due to rising house prices and as their share of the population increases.
While retired people make up 16 per cent of the population they hold 27 per cent of net wealth in the country, much of this due to the stock of housing they own. Retirees are expected to make up 26 per cent of the population by 2047 according to the Central Statistics Office.
“Collectively, those in both the ‘boomer’ generation, aged between 61 and 79, and the ‘builders’, aged over 80, have accumulated vast amounts of assets such as property, pensions and shares, and planning for the smooth transfer of assets to the next generation will be key. A great transfer of wealth will occur over the coming two decades,” Goodbody said.
In terms of wealth, Irish households have “never had it so good”, Goodbody said, with the net wealth of households here amounting to €1.2 trillion, treble the level of 2012, which was the final year of our Troika bailout post the 2008 financial crash.
By comparison, net wealth in the euro area rose by less than 50 per cent over the same time frame.
In terms of overall wealth, housing was again the biggest contributor at €812 billion, with €556 billion in financial assets. Liabilities of €163 billion also exist, giving a net figure of €1.2 trillion.
The Goodbody report, entitled A Lasting Legacy: Guide to Inheritance and Estate Planning in Ireland, also illustrates the uneven way in which our wealth is distributed with just under half of the total held by the wealthiest 10 per cent of households.
“Although the bottom 50 per cent of households holds just 9 per cent of net wealth, this is up from 2 per cent a decade ago due to lower mortgage liabilities and higher home price values,” the report adds.
Catriona Coady, head of tax at Goodbody and author of the report, said the key to effective estate planning was to develop a “robust plan” as early as possible. “An unprecedented transfer of wealth will occur in Ireland over the coming two decades and given the large rise in the quantum of these assets in recent years, the decisions on how to manage it most effectively will have far-reaching consequences for people right across the economy, whether they are in family businesses, farmers, or have careers in industry and the services sectors,” she said.
“The reality is that many people in older generations, not just the wealthy in our society, are sitting on valuable housing assets and they will be concerned about how best to set up the younger generation with a home of their own. This is something that is of concern to large sectors of the population, regardless of their wealth status.”
