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I heard somewhere that if we wish someone younger than us then say "Best of luck" and if we wish someone older than us then say " All The best". I don't know how much of this is true. Will you please describe the difference between the phrases and also which to use under the different contexts?

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As a native American English speaker, I don't know if there is much of a difference. At the very least, no one has ever taken me to task for using either one with the inappropriate age group.

In fact, they both seem to be ellipses of the phrase I wish you all the best of luck, it just depends on where you cut the phrase.

I wish you (all the best) of luck.

I wish you all the (best of luck).

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All the best is more a farewell gesture than best of luck; the former has an air of finality that the latter lacks. If you say "all the best" to someone, there's an expectation that a significant amount of time will pass before you meet one another again. Best of luck doesn't have such an implication, I believe; if you were to go to Vegas, and bet your life savings at the craps table on a 30:1 shot, I might say to you from sidelines, "best of luck", though I readily expect to be there comforting you in just a few moments hence. Saying "all the best" there would sound very strange, if you knew we weren't going to part for some time.

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