People born in 1960s and 1970s 'poorer' than previous generation

 
A grandmother, her grandson and two parents sitting on a bench in the countryside Since the 1950s successive generations have enjoyed a better standard of living than their parents

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People born in the 1960s and 1970s will only be wealthier than the previous generation in retirement if they inherit money, the Institute for Fiscal Studies (IFS) has said.

The think tank found people in their 40s and 50s are less likely to own a home than those 10 years older.

Their incomes are also no higher and their private pensions are smaller.

It suggests an end to the steadily rising incomes and living standards since World War Two.

The IFS analysed the economic circumstances of individuals born between the 1940s and the 1970s.

The only area in which they will be better off than the previous generation is that they are more likely to inherit wealth, with about 70% of those born in the late 1970s expecting to receive an inheritance, compared with 28% of those born in the early 1940s, the IFS said.

While they are more likely to inherit, the benefits will not be evenly spread, with those who are the wealthiest likely to receive the most.

'Lavish' spending

The IFS found that the incomes of working-age adults were no higher in real terms than those of the generation born a decade earlier.

While those born in the '60s and '70s did earn higher incomes when they were younger, they spent lavishly, and so do not have more money saved than the generation before them.

The end of final salary pension schemes means they will suffer in comparison to the previous generation and when they come to claim the state pension it will make up a smaller proportion of their previous earnings.

Rising property prices have made it harder to get on the housing ladder, with home ownership among the '60s and '70s generation falling to about two-thirds, compared with a peak of four-fifths among those born in the 1940s and 1950s, the report said.

One of the author's of the study, Andrew Hood, said: "Since the Second World War, successive cohorts have enjoyed higher incomes and living standards than their parents.

"Yet the incomes and wealth of those born in the 1960s and 1970s look no higher than the cohorts who came before them.

"As a result, younger cohorts are likely to have to rely on inheritances to be better off in retirement than their predecessors.

"But inheritances are unequally distributed, with households that are already relatively wealthy far more likely to benefit."

Inheritance and inequality

IFS director Paul Johnson added: "A lot of that wealth that the older generation have will be inherited by the younger generation - but it tends to be the richer members of the younger generation.

Speaking to BBC Radio 5 live he said: "You start off with this inequality between generations, but what it actually creates, through inheritance, is an inequality within the younger generation."

A government spokesman said it was "committed to protecting pensioners", citing the protection of benefits such as free bus passes and TV licences.

"We are reforming the UK's state pension system to be more sustainable for the future and widening access to a workplace pension," he said.

"These combined reforms will improve the incomes of nine million people currently facing inadequate income in retirement."

 

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  • rate this
    0

    Comment number 110.

    The one group from the 60s and 70s that WON'T be worse off are those with public sector pensions. They are likely to live 10 or 15 years longer in retirement than their parents or grandparents but will have retired at the same age and paid the same toward their pension.

  • rate this
    +3

    Comment number 109.

    My parents generation learned "make do and mend". My generation learned "I want it and I want it now". Credit cards that "take the waiting out of wanting" rack up interest charges so that £1000 item ends up costing more like £1200 by the time it's paid off.

    The sad thing is it's never going to get better until there's a vast amount of financial pain. The only question is who takes the pain.

  • rate this
    +7

    Comment number 108.

    The money in your pocket is inversely proportional to the bonuses of the City spivs who caused the bank crash, fixed the LIBOR rate, fiddled the FOREx rates, oversold PPI etc.,

    In Iceland, failed bankers were jailed. In the UK, we not only let them keep their loot, but we taxpayers pay their fines.

    That and their stashing loot abroad in tax havens is a big part of the problem.

  • rate this
    +6

    Comment number 107.

    92. Tchernobog
    The current London centric (and unsustainable) boom is based entirely on property speculation and consumer spending.
    ==
    Exactly.

    Governments now serve speculators, private monopolies and multi-nationals instead of the people.

    Wealth is being redistributed from poor to rich.

    The cost of the basics of life (housing, energy, food, transport) will make more and more people poor.

  • rate this
    0

    Comment number 106.

    Successive Govt policies have screwed recent generations. The biggest factor is the cost of housing. A combination of DSS, immigration, regional policy, planning permission and simple lack of space has inflated house prices or rents exponentially. Don't see anyone with the brains and/or b%lls to do anything about it though.

  • rate this
    +1

    Comment number 105.

    I suggest that most of the problems for the young today relate to the ill thought out planning policies of the past 50 years coupled with the continued cutback in building by Government Cheap money does not build houses it just forces the prices up.The only way to provide decent housing for all is to set the build price not the selling price.Council Houses kept the profiteers out of houses

  • rate this
    +6

    Comment number 104.

    You cannot blame baby boomers, firstly we didn't decide when were were to be born, we grew up into full employment Britain before the Nasty parties decided to abandon industry in favour of the "city".
    We were a product of people that had lived in harder times and copied them i.e. Lived within our means, steered clear of debt, took any job we could.
    We were just lucky, nothing else.

  • rate this
    0

    Comment number 103.

    I am very aware that if it had not been for an inheritance from my maternal grandfather, I would not have been able to make an investment that subsequently enabled me to get on the housing ladder in a good area of the city which I live near. Without that I might just have been able to buy something in a deprived area - might.

    Any other inheritance is at least 10, if not 15 years away. Lucky me

  • rate this
    +2

    Comment number 102.

    @23.Robbidou

    "What do you expect "Babyboomers" to do? We generally carry far less debt than people younger than us because our parents were so averse to the "nevernever""

    That's true. But sadly most 'boomers failed to pass on those values to their children, as this report illustrates.

  • rate this
    +3

    Comment number 101.

    'cost to the country of immigrants' @ 45

    *

    This cost is indeed large, but it's negative.

    The actual data (as opposed to softhead bigotry) indicates that immigration delivers a significant net economic benefit to the UK.

  • rate this
    +5

    Comment number 100.

    #78 Stop sounding jealous and take control of your life. How the hell can you "blame" a previous generation for being "better off" than you are? You can blame government policies, world economics instead. What the baby boomers have/had they worked all their life for, paid their taxes and into their pensions. Stop moaning and do something about your own life.

  • rate this
    -2

    Comment number 99.

    And many will inherit money & property, including those who complain house prices prevent them getting on the ladder.

    We baby boomers worked hard & saved - we did not inherit anything significant because our parents were relatively poor & hadn't benefited from house price inflation.

    Nonetheless, people like @1 (agentpurple) are still bitter whilst they sit back and expect it all on a plate.

  • rate this
    +3

    Comment number 98.

    Forty years of wealth grabbing by the 1% has brought us to this. We need to grab it back

  • rate this
    +3

    Comment number 97.

    I do hope Gordon Brown, who destroyed Europe's best funded private pensions and effectively killed off Final salary pensions in the private sector feels proud of himself now. The real issue is the apartheid between the public sector, still on index linked final salary schemes and the rest of us who want to save more for our retirement but see huge lumps of our taxes go to support public schemes.

  • rate this
    +3

    Comment number 96.

    Where did they get the "spent lavishly" from? Has the recession and massive unemployment of the 70's been wiped from history then?

    This report just confirms what many of us already knew. There has been an organised assault on the middle class in conjunction with deindustrialisation and mass immigration under the UN's agenda 21. The pillage of rights and wealth by social engineers for the NWO.

  • rate this
    +157

    Comment number 95.

    I was born in 1979 and since I started work I've always said that I won't be able to own a house until my parents bequeath theirs to me and my brother. The problem is twofold. First the house prices have been inflated by a lot of the council houses being sold off from the 80's until now without being replaced and secondly, Buy to let landlords are taking affordable housing out of the buying market

  • rate this
    +62

    Comment number 94.

    It wouldn't surprise me in the slightest, those in their 40's now left school mid Austerity, and they struggled to find a job. Now, at this second wave of austerity, they are losing their jobs and finding a Government more interested in the future of school leavers than them. Whilst School-leavers obviously need to find jobs, you can't help feeling a little given up on in that situation.

  • rate this
    +4

    Comment number 93.

    Tell us something we don't know. This is not ground-breaking news and has been known for years. Sadly for people born today the likelihood is that they will be worse off still. My concern is what are we going to do about it?

  • rate this
    +18

    Comment number 92.

    The current London centric (and unsustainable) boom is based entirely on property speculation and consumer spending. And that spending is savings. Money Week have it right, the end is nigh for Britain as we have come to know it. Something will have to give, whether that is the NHS (most likely) or welfare in general.You cannot build an economy on household debt.
    http://moneyweek.com/endofbritain/

  • rate this
    0

    Comment number 91.

    Tell us something we don't know??

 

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