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IFS: People born in ’60s and ’70s no better off in retirement than predecessors

People born in the 1960s and 1970s will be no better off in retirement than their predecessors unless they inherit wealth, according to a new report.

The Institute for Fiscal Studies has today published a study comparing the retirement wealth expectations of different cohorts of people born after World War Two.

The report says when compared with those born a decade earlier at the same age, people born in the 1960s and 1970s have no higher take-home income, are less likely to own a home, are likely to have lower private pension wealth and will usually find their state pension replaces a smaller proportion of their earnings.

The IFS says the shift away from generous final salary pensions to defined contribution schemes in the private sector has been a key contributing factor in the deterioration of retirement expectations for younger generations.

IFS research economist Andrew Hood says: “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 rely on inheritances to be better off in retirement than their predecessors.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. The only way anyone should be better off is if they improve productivity. The notion that people should just automatically get more stuff year on year is both untrue and unsustainable. The amount of “stuff available is finite, so improved living standards need to be earned!

  2. I think there’s a fair body of evidence to suggest that future retirees are likely to be significantly worse off than their predecessors ~ DB schemes closing left, right and centre, the relentles decline in annuity rates, endless government meddling with the pensions framework, empty promises to fix all the damage that’s been done as a result, consumer confidence in pension saving at an all time low, reductions to State pensions. When was the last item of good news on pensions likely to encourage people to start or even maintain existing pension saving plans? Whatever happened to the Conservative party’s pre-election manifesto pledge to “reignite the UK’s savings culture”? AE isn’t the answer either. A very sorry state of affairs.

  3. I rather think this is poor analysis at best or just piffle at worst.

    “People born in ’60s and ’70s no better off in retirement than predecessors.”

    What law is there that this is an immutable requirement? This cohort regards a 35 – 38 hour week as normal. Their predecessors worked a minimum of 42 hours and often and not unusually 50 or 60. When the older generation was in their 30’s and 40’s basic rate tax was 34% with higher rate rising to 83% with the addition of 15% Investment Income Surcharge. They paid for their State Pensions in spades.

    House prices have never been higher. So who will inherit? There have never been more buy to lets – so who will inherit? How do they know how much this age group has salted away in things other than pensions? Pensions for many have been hugely discredited manly due to government incessant tinkering. Final salary schemes were decimated following the over-reaction to Maxwell.

    I don’t know of any 40 to 50 year olds who don’t own their own homes. But then perhaps I lead a sheltered life. That there are a significant number who can’t get a mortgage due to bad credit ratings is another matter.

    If they mean we have a pretty big underclass I won’t argue. But then those older than this group didn’t have credit cards, didn’t live in an economy that relied on people spending money they didn’t have and savings were a part of life.

    As to the present older generation having to spend their money on care home fees. That is possible, but again points to the fracture in society. In years gone by Granddad or Grandma lived with the family. Today the majority ‘live over the brush’ and marriage (even if it lasts) is a rarity. Parents in old age are expected to fend for themselves. So you can’t have it all ways.
    What we will probably have is that those that were brought up in what many consider to be a normal family environment with traditional values and a decent education will probably inherit and be reasonably comfortable in old age. Those that were brought up in ‘modern units’ , who had the disadvantage of seeing Grammar Schools trashed, were brought up to regard instant material gratification as normal, will now more likely pay the price of decades of inept Government policy. If Government is worried about these findings than perhaps they might consider abolishing or reducing Inheritance Tax and Stamp Duty – fat chance and no chance. So please save us the crocodile tears.

  4. More pretentious waffle from HK, if only you made a comment worth reading…….

  5. @Seamus

    1. No one forces you to read it.
    2. Your somewhat less than erudite comment lacks specifics. What is pretentious about it? What is waffle? I’m quite open to intelligent criticism, after all that is what debate is all about. Although unlike you I am not bashful about divulging who I am.
    3. Do I infer from what seems your irritated response that you are either in the age bracket concerned with no hope of inheritance or are ‘living over the brush’?

  6. 1. Your opinionated initial opening remark shows your lack of understanding in this modern society.

    2. My comment does not show any lack of understanding or knowledge rather contempt for your somewhat bigoted remarks. If I had to guess I bet you’ve been in this industry for more years then I care to mention and will have seen many changes over the years and disagreed with them all….still writing advice on the back of a fag packet no doubt.

    3. Much younger than that, sorry, you are right about the inheritance though.

  7. @ Seamus

    Ah that explains a lot. A wet behind the ears know nothing youngster, who probably has been disadvantaged by the modern low educational standards and is struggling to make a decent living. While at the same time being up to his neck in debt.

    For your edification this is my second career. I haven’t always been in financial services, but probably entered it before you were born. I probably still put in more hours in a week than you do in a fortnight. For your uninformed information I happen to be level 6 and attained that when you were probably still in nappies. I have been charging fees since you were still at school and was quite relaxed about RDR. Far from disagreeing with many of the changes I was quite keen on many of them and would have liked to see some of them go much further. I don’t smoke so I don’t use fag packets.

    It’s not so much that I lack understanding of this modern society as that I despise so much of it. Much as it may surprise you my generation were your age once. We didn’t whinge and moan we ‘got on out bikes’ and grafted. I got my first holiday job at age 14 as a greengrocers delivery boy – delivering on a push bike. We didn’t spend what we didn’t have. We saved and then bought.

    We actually had to be bright to get into University and there were no Mickey Mouse courses. We were privileged to receive a higher education. It was outstanding if you achieved 8 O levels and 3 A levels – not the nonsense numbers awarded today. But then unlike so many of today’s young we were literate and numerate and were beneficiaries of a much more rounded education.

    However not all youngsters today are of that mold. My own nephews and nieces and the sons and daughters of friends (we don’t have kids) are all well-educated have really great jobs and have made a conspicuous success of their lives. They will also stand to inherit. So even as they are members of your cohort they are as far removed from you as am I.

    Just look at the great young people that work at Money Marketing as an example. They are not at all like you. The Martin Bamford’s of this world have much to teach the likes of you. Not that you would take any advice, but nevertheless gratuitously given – a large helping of humility might do you a lot of good.
    My age group have in the main earned their opinions. We don’t expect you to agree with them, but to denigrate them out of hand shows a callousness that bespeaks ignorance. Perhaps that’s why modern society is in such a state.

  8. Like I said Harry you’re full of your own self importance and think because you managed to pass a few exams and reach chartered status you are somewhat better than the rest of us. You’re nothing but an ageing buffoon constantly harping back to the good old days. You’re quite right I am far removed form you and thank god that’s the case. The last thing I would want to be is remotely anything like you or your friends, nieces, nephews etc. Again you label me without justification, for your information I have no debt, I own my own several houses (no mortgages) and my own company (current value in excess of £15 million), I work long hours and support the community I grew up in……I don’t label people or make stereotypical remarks about them, you probably think all people up north work down pit and have a pet whippet….and I don’t pull to pieces every article I read “I rather think this is poor analysis at best or just piffle at worst”… you should keep your pathetic comments to yourself, who cares what you think…..

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