Image: FlickrThe fourth in an occasional series that shows how the most numerous older generation in history may be lording it over the younger generations like never before. Today, a look at the wealth of younger generations and why they remain worse off.
Research from the Institute for Fiscal Studies has found that millennials in their early 30s are half as wealthy as those who are now in their 40s were at the same age.
People born in the early 1980 have an average wealth of £27,000 each, against £53,000 for people born in 1970s at the same age.
The 1980s generation were the first post-war cohort not to enjoy higher incomes in early adulthood than those born in the previous decade. They can thank the stagnation of working-age incomes and the recession that hit millennials’ pay and employment for this sorry state of affairs.
The IFS also found that at the age of 30, only 40% were owner-occupiers compared to at least 55% born in the 1940s right up until the 1970s.
People currently in their late 20s or born in early 1980, have spent nearly 30% of their net income on renting costs, compared to 15% for homeowners, which is largely mortgage interest. At the same time, renters and homeowners in the 1960s both spent around 20% of their income on housing costs on average.
Campbell Robb, housing charity Shelter's chief executive, said: "With sky-high house prices so out of step with average wages, it's no wonder a whole generation are being priced out of a home of their own and left with no choice but expensive, unstable private renting.”
Andrew Hood, research economist at IFS said: “Sharp falls in home-ownership rates and in access to generous company pension schemes, alongside historically low interest rates, will make it much harder for today’s young adults to build up wealth in future than it was for previous generations.”
It’s safe to say Generation X and those older have benefitted in a way younger people haven’t. But could this change in the foreseeable future?
It’s pretty unlikely, as less than 10% of millennial employers in the private sector (who were born in the early 1980s) have access to a generous Defined Benefit (DB) scheme, compared to 15% of those born in the 1970s and nearly 40% of those born in the 1960s.
With trying to save for a pension along with the struggle to buy a home, high rent prices, increasing cost of living and lack of savings, the outlook isn’t looking promising.
Liberal Democrat Treasury spokeswoman Susan Kramer said: "This is what happens when short-term political calculations override the need to build a better future for everyone.
"Year after year, government after government, we are failing to support the next generation, often because the simplest political solution is to focus purely on those more likely to vote. We need to redress the balance between generations."
See also: The tyranny of the baby boomers, part one: the income divide
The tyranny of the baby boomers, part two: the return of ounces
The tyranny of the baby boomers, part three, electoral apathy
