The think tank said that inheritances have been growing as a share of national income in the UK since the 1970s and this trend looks to continue as generations at older ages hold more wealth than their immediate predecessors but younger generations have no higher incomes than the generations born just before them.

The IFS believes inheritances are set to grow dramatically compared with other sources of income – meaning they will become increasingly important and widen the gap between the rich and the less wealthy.

This indicates a significant social change as assets passed down in wills become a bigger driver of differences in living standards.

The IFS expects that existing disparities between older and younger generations are will translate into reduced social mobility within younger generations in the future.

For those born in the 1980s, average inheritances compared to lifetime income are projected to be almost twice as large as for those born in the 1960s. The IFS projects, on average, inheritances will be worth 9% of household lifetime (non-inheritance) income for those born in the 1960s, rising to 16% for those born in the 1980s.

For people born in the 1960s whose parents were in the top fifth in terms of the distribution of wealth, inheritances were projected to increase their lifetime incomes by 17%. But for those whose parents were in the bottom fifth, inheritances were expected to add 2% to their lifetime incomes on average.

The disparity was even more pronounced for people born in the 1980s. For those with parents in the top fifth in terms of wealth, inheritances were projected to add 29% to their lifetime incomes. But for those whose parents were in the bottom fifth, inheritances were expected to add 5% to their incomes on average.

The research also found people are increasingly relying on inheritances to fund their retirement. The percentage of people expecting to receive an inheritance has grown from 72% of people born in the 1960s to 81% of those born in the 1980s.

When they were in their late 30s, 24% of those born in the 1960s expected to use a future inheritance as a source of retirement funding, rising to 27% of those born in the 1970s, the IFS said.

The IFS said that those with higher incomes tend to be more likely to be able to reduce the amount that they save in anticipation of receiving future inheritances, meaning they could be more likely see a larger effect on their current living standards.

David Sturrock, a senior research economist at IFS and an author of the report, said: “As inheritances become larger, any policies that redistribute inheritances will have bigger impacts on inequality and social mobility.”