Why it STILL pays to be a baby boomer

BRITONS preparing to retire are £78,000 richer than their equivalents a decade ago.

But the fortunes of all other working age groups have shrunk, according to a report that lays bare the widening gap between the wealth of baby boomers and younger generations.

Thirty to 34-year-olds today are £25,000 worse off in real terms than members of this age bracket were around ten years ago. And the average 40 to 50-year-old is worth £28,000 less than their 2008 equivalent.

The report by City watchdog the Financial Conduct Authority highlighted how those approaching retirement often enjoy gold-plated pensions and have benefited from decades of growth in house prices.

Meanwhile many working families are struggling under a huge weight of debt and are responsible for supporting ageing parents and young children.

The FCA analysed data from the Office for National Statistics on how levels of property, pension, savings and investment wealth have changed in ten years. It found Britons approaching retirement – defined as aged 60 to 70 – are on average £78,000 wealthier than their 2008 counterparts. The richest 25 per cent of this group have seen their wealth grow by £175,000.

Christopher Woolard, strategy and competition director at the FCA, said: ‘From baby boomers to Generation X to millennials, everyone’s financial needs and circumstances are evolving. It is clear each generation will have its own challenges.’

The report defined baby boomers as born between 1946 and 1965, and described how a typical couple in this age bracket bought their first home aged 25, paid off their mortgage by 50 and looked forward to guaranteed pension income for life. Since 1990, the value of their homes will have risen by an extraordinary 259 per cent. They are also likely to have been saving during a golden period for investors between 1975 and 1995 – when the average return was 10.5 per cent. Members of Generation X, born between 1966 and 1980, are less likely to have enjoyed these financial advantages, the report found. Meanwhile millennials – defined as those born from 1981 to 2000 – now typically have to wait until the age of 30 to 35 before they can afford their first home. With a mortgage and student debt they are unlikely to repay in their working lives, they have limited disposable income to save.

Tom Selby, senior analyst at AJ Bell, said: ‘Millennials face severe challenges in building a decent retirement pot, particularly when compared to baby boomers who were more likely to enjoy generous defined benefit pension provision. Housing wealth too is highly concentrated within this older generation, who were able to buy relatively cheaply and benefit from rapid price rises.’

The FCA is calling on banks and financial institutions to come up with solutions.

‘Benefit from rapid price rises’