Financial News

  • 18 December 2013, 7:12

Children Of The 1960s Worse Off Than Parents

The children of the 1960s and 1970s are likely to be worse off than their parents, with no higher income or savings, no home ownership and smaller private pensions than those born in the previous decade.

The only way they will be better off when they retire is thanks to inherited wealth, according to the leading economic think-tank the Institute for Fiscal Studies.

More people born in the 1970s are expecting to inherit (70%) than those born in the early 1940s (28%).

The findings appear to bring to an end to the steady rise in incomes and living standards that successive generations have enjoyedsince the end of World War Two.

Incomes for working-age adults born in the 1960s and 1970s were no higher in real terms than those of their predecessors of the same age a decade ago, the study found.

And, while the Sixties and Seventies generation did have higher incomes when they were younger, they also spent more, leaving them with no more savings than those of the previous generations.

Those in their forties and fifties have also suffered from the move away from final salary pension schemes to less generous deals.

That same generation has also taken longer to get on the housing ladder, with the home ownership rate having fallen back to around two-thirds compared with a peak of four-fifths among those born in the 1940s and 1950s.

And, as far as inheritance goes, while they are more likely to inherit than their predecessors, the gap between the richest and the poorest will grow, with those already the wealthiest set to receive the most.

Andrew Hood, one of the report's authors, 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."