Babyboomer Wealth Gap – Are they Kidding?

IFS Report reveals a babyboomer wealth gap with 8 out 10 babyboomer couples better off in retirement than when they were working!

The report carried out by the  Institute of Fiscal Studies (IFS) has found  babyboomer couples  who have had the privilege of enjoying the long decades of post war prosperity with the support of the welfare state, generous occupational pensions and soaring house values  are now reaping the benefits.


Apparently it shows further evidence of the growing babyboomer wealth gap between the generations with retired couples born in the 1940's significantly better off than their children or grandchildren will be.  They apparently will be heavily relying on their inheritance (if we haven't spent it) and will have to make much higher pension contributions than we did.

The researchers found that in the majority of cases middle-class couples were wealthier after finishing work than they had been while in full-time employment.

They also found that the state pension had helped deliver a relatively similar retirement income for those who entered the workforce in the 1960's and spent much of their lives on low pay.  Which is the equivalent of saying that baby boomers who stayed in low paid jobs all their working life who were  struggling to survive then  are  still struggling in retirement if all they have to live on is a state pension.

One of the reasons put forward for the babyboomer wealth gap is  the baby boomer generation ended up saving more than they needed for retirement  (really!) whereas  future generations may look quite different.

The findings seem to  be at odds with what Age UK  and other charities report.  Their findings estimate that one in six pensioners are struggling to live on their state pension and are actually living in poverty.  Who do you believe?


Babyboomer wealth gap or poverty?

Looking around my peers who were born in the 40's and entered the workforce in the 60's few of us had the opportunity of going to University but  most of us were able to  climb the career ladder through sheer hard work.

Most of us were privileged enough to enjoy a reasonable standard of living.  I would say  that the majority of us certainly don't have the same spending power in retirement that we expected to have.

The baby boomer generation are often depicted by the press and the younger generation  as being a very privileged generation. We’ve even been blamed for the financial mess the world is in now.

Perhaps we were privileged  compared to previous generations who endured years of war and hardship.   We never had to endure a war on our doorstep  and we have had the benefits of a welfare  system to cushion us when needed  so we have never had to starve. 

It’s probably fair to say we are the healthiest generation  being brought up on a no nonsense nutritional  diet with plenty of exercise and fresh air.  We still had our fair share of ups and downs through our life time it hasn't all been plain sailing.

The miners strikes in the 70’s which led us into the first recession with at least two other recessions in the late 80’s/early 90’s.  The current recession which seems to have lasted forever which has badly eroded any savings we had for retirement.   Annuity rates and pension rates have both fallen alarmingly over the last few years.   

We have had to endure stock market crashes, property crashes,  unemployment and redundancies  just as this generation has.

We may have been able to buy our homes  which have increased in value but the increased value is only worth  the paper it’s written on unless  we sell up and live in a tent!  

The latest blow is going to be the failing NHS forcing  us to pay for medical treatments  which should be covered by the years of NI contributions we’ve paid  and the cost of care if we should be unfortunate enough to need it in our old age. 

If we have to fund our own care their will be no inheritance for our children and grandchildren and that certainly would create a babyboomer wealth gap between the generations.

There’s no doubt about it our children and possibly our grandchildren  will struggle even more in their retirement unless something radical changes.  Many of them come out of University with thousands of pounds of  debt to pay off before they can think of buying a home.  Saving for retirement will probably be a luxury they will never afford.

But to say that  babyboomers are better off in retirement than when we were working  is surely not true for the vast majority of us.

I’d love to know where the  IFS researchers found these wealthy  retirees from!


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