Why it STILL pays to be a baby boomer

Daily Mail - - News - By Sa­man­tha Part­ing­ton Money Mail Re­porter

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’

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