Why we are poorer than our parents
A new radio series is examining the wealth gap between the baby boomers and their children. But it's really quite simple.
This weekend, renowned financial guru Alvin Hall hosts the first episode of a new four-part series on Radio 4 called Poorer Than Their Parents. Its premise, according to the blurb accompanying the series, is to examine “whether today's youth will be the first for generations to be worse off than their parents”.
Our parents’ generation, the so-called ‘baby boomers’, have taken a lot of flak over the past year. Conservative frontbencher David Willetts’ 2010 book The Pinch estimated that, of Britain’s £6.7 trillion pile of personal wealth (including property, investments and pensions), the baby boomers were worth £3.5 trillion. And the over 65s were worth £2.3 trillion. All of us under 45 own just £900 billion.
Now, you might argue that there is an obvious disparity between the wealth of older people compared to younger generations. They’ve worked longer (so have bigger pension pots), they’ve paid off or are close to paying off their mortgages. But, in this case, the wealth gap actually looks like more of a chasm.
How the baby boomers benefitted
And if we look at some of the things that the baby boomer generation benefitted from – massive house price inflation, generous final salary pensions, free education – it’s clear how they’ve accumulated all that wealth. I know of retirees who earn almost as much from their pensions as they did during their working life.
Now look at Austerity Britain 2011 with its high house prices, reduction in pensions and massive increase in student tuition fees and it’s clear to see why this disparity exists. That’s not to deny that many baby boomers are helping their children and grandchildren out, for example with savings to fund education or part of a deposit to help them onto the property ladder. But debt seems to come as a given in the financial lives of anyone born from the 70s onwards.
“We cannot just fold our arms and let improvements in technology discharge our obligation to future generations,” Willetts wrote in response to criticism of his book by Boris Johnson. And that hits on an important point – while technology invented by that generation has improved much of our lives and, crucially, our life expectancy, it will not pay for our futures. Or indeed our present.
So I would argue it doesn’t take a four-part radio series to uncover why we’re poorer than our parents, the answers are plain for all to see.
First of all I am 57 and although better off than my children have worked very hard for many years away from my family so that they would have a good chance in Life. They went to university and got their respective degrees and have obtained work.
Pension only what I have paid in myself is the pension company doing well for me ???? greed from these institutes will ensure that it does not.
However here is another problem, Nepotism, greed by the banking system, greed by companies who hold down their employees wages for the sake of making the maximum profit with a story of we cannot afford it to please the banks and investment houses and share holders.
Higher council taxes to pay for their workers who go to the cafe for breakfast the minute they pull out of the depots, have 2 hr lunch breaks then take a nice slow drive back to knock off from work.
I would like too know what people mean by going on the sick !!!! this is something strange to me, but not too teachers or council workers or many others in a salary paid job. I had a back operation many years ago and was back in work after 3 weeks; when I was off I never got paid I only get paid when I work.
You work for what you get, save money this is a joke because the banks, investment houses take it from you saying look what we can do for you. Then what happens when it is to be paid out, we are sorry we made a mistake and the market did not do as well as we thought etc etc etc There is no mention of how much bonus they paid people and ripped the public off. If they paid a good bonus to their employees this means to me they have done well and my savings plans, pension etc should reflect this.
REMEMBER THE ENDOWMENT RIP OFF
So at the moment I am still working and earning money of which when we as parents will die will leave what we have to our children. So the wealth will go to them.
That is unless the Government, the banks do not come up with some hair brained scheme to take it away from them.
If you have not watched this film " INSIDE JOB " please do you will see what banks and governments do to us based on greed and profit.
My children are in the same position we as parents were when we had children; which is one reason why I now do what I do to improve it for them.
Alvin Hall now also remember buy his book watch his program he will get richer by it but remember this is not real life what you see in your hard work and what is in pocket at the end of the day is real.
You cannot pay out what you do not have coming in as this leads to debt
this irritates a little! i am a so called baby boomer,as is my wife.we started with a few quid we put together to furnish a rented flat,both worked like hell to raise deposit money,bought a house brought up two kids with me working nights, wife working days,so i ddnt really get to know my kids till later on in life..paid into a private pension my whole working life to look after us when we can no longer work,which bankers and governments have done their very best to destroy along the way.we have battled our way through three day weeks,various recessions and much government mismanagement.and asked for nothing.we had our hard times with our parents after 2nd world war,rationing until the late 50s and so on, so we know what its like .now we seem to be portrayed as the villains of the piece ?! dont quite grasp what we did that was so wrong.
I am also a "baby boomer" but when we were much younger we lived by a much different set of rules and customs not seen very much today. We were encouraged to save from a very early age and to take care of our money. Thrift and actually the lack of anything to do other than play with your pals was the order of the day. We all had our Post Office savings book in which we saved up for our annual holidays etc.. The cinema was the only real night out and perhaps once a month we were allowed to go to the matinee (especially for kids). We spent most of our time outdoors playing at all sort of games and adventures, something health and safety would frown on today.
Compare that to today and there is very little of that lifestyle left. Every child has a fortune in possessions and loads of toys and games. They don't really think about money, saving etc..
Their lifestyle is one of real indulgence compared to those who were born just after the second world war. The world of today's young parents knows nothing of austerity and living a quiet life in order to make what little money there was last until the next pay day. We grew all our own vegetables, had chickens for eggs and the pot at christmas and mum knitted and sewed incessantly, ripping down old or undersized woollens to wash and re-use the wool. Indeed a totally different life. We had little but I think we were a lot happier and much more content with what we had. We had a far greater degree of supervision and our moral standards were strictly enforced. Perhaps the generation after our had so much more material things and limitless options, they lost of thought of the need for money later in life.
We had to carry a small candle to bed - no lights in a large eerie haunted house. I could go on , the fact I did not own a book so learned to read my elder siblings alone. life was very hard would not like to return to such DEPRAVATION.
My kids , even now they are grown up ,think it's funny when we talk about
the "old" days . No banana's etc. till about 1954/5 when rationing finished .
Our first house 650 pound and the mortgage 12 pound odd - a month .
But the wages wouldn't buy you 2 gallons of petrol now . We never really
suffered , even when my ma became a widow , we still had holidays and
treats . Some posters have said there was no child benefit , there was but
not for the first child till the early 70s . And maternity benefits were in place
BUT only for working mothers , and they were a pittance , My first son was
born in 1968 and I remember we even got a grant towards a cot and things .
It feels like we are all better -off than our parents , and mine could only dream
of my private pension and retiring at 60 .
There are other reasons for this generational wealth gap in the Western world. Firstly, after every war the economy booms, making up for all the destruction that has taken place (though unfortunately it can't make up for the lost lives). The baby boomers were born into boomtime. Secondly, many Western countries were still creaming off a great deal of wealth from their colonies. It took into the 1960s and 70s before they were either thrown out by nationalist independence movements or withdrew before that. This wealth isn't available to the West any more in this simple master/subject way. The baby boomers have been lucky to live in a period between the world economy crashing in the 1930s and crashing again in 2007.Other generations have been lucky before them, and others will be again. But for the next at least two generations, things will be tough. Barring a major war, of course.
The reason the modern generation consider themselves less well off, is their expectancy is far greater.
They feel it is a right to own all the latest overpriced designer clothes, the latest mobile, a car and an unlimited supply of credit.
Baby Boomers had none of this, we made our own fun and paid for most things by saving. There were very few families with cars. Motorcycles were common as was a learned ability to fix them. My first wage packet in 1960 was less than 3.00 and I paid Ni and tax on that. 1.50 went to my mother for housekeeping.
How many of the current generation pay 60% of their take-home pay into the household???
What rubbish, I was born at the end of the 2nd world war when the country was nearly bankrupt.
My sister, my parents and myself lived in a council house. My father worked all the hours he could, sometimes from 4am to 5pm or very low truck driver pay to support us all.
We could not afford holidays or a car and I remember my mother waiting for my father to bring home his wages so that she could buy food for us all. My parents were non drinking, non smoking, hard working folk who really struggled to pay their way but remarkably, due to my mother's prudence always stayed out of debt.
I, in contrast own my own house, have a new car, savings and go on holiday's. As my wife and I have never had money left to us, how have we achieved this?
By working hard all our lives, living modestly, making financial provision for ourselves in terms of regular savings throughout our lives (even when we did not earn much), not spending money on beer and fags etc,
The problem is that people expect everything to land on their laps without any effort from them. Sorry this won't work. (unless you are on benefits!).
All down to one thing- Exorbitantly high property prices
unless you are downsizing, or are a property speculator, NO ONE benefits from higher property prices, EVERYONE gains from realistic prices.
The cause- The four horsemen of the property apocalypse
1. Greedy speculators, flippers, buy to let thieves etc etc
2. Estate agents- unregulated con artists aiming to pushing prices up for fat commissions
3. Lenders- pass money to everyone with a heartbeat- again for profit and bonus motives.
4. Government- low interest rates (supposedly set by "independent" bank of England) to increase stamp duty take and create false feel good factor to enable re-election.
this generation will always suffer whilst these beasts continue to flourish.
I, in contrast own my own house, have a new car, savings and go on holiday's. As my wife and I have never had money left to us, how have we achieved this?
By working hard all our lives, living modestly, making financial provision for ourselves in terms of regular savings throughout our lives (even when we did not earn much), not spending money on beer and fags etc,The point is Dave, that those of us acting in the same way as yourself, living moderate family lives can no longer afford to get on the property ladder, save enough to go on holiday or buy a decent car. Wages have not risen in line with living expenses, I'd like to see you live off 15k a year, feed three kids and still manage to save enough for the downpayment on a house.
I would say to the 'Money Team', do what your parents did, GET AN EDUCATION.
I own my own property outright, no 'sugar daddy', just good old 'toil,sweat & tears',with no 'benefit' from house price inflation,,I paid,like most of my generation,an 'inflated' price for my property.
My pension's were 'earnt',I paid the FULL Contributions for my State Pension, NOT from 'credits',but from CONTRIBUTIONS.
As for 'generous final salary pensions',just another MYTH from people who know not, what a days work is,again, I paid for my 'Occupational Pension', note that word, 'Occupational'.
As for 'generous' pensions, my combined state & occupational pension's from a life at work,after paying Council Tax et'c, leaves me in a worse financial position, than someone on Pension Credit, who has NEVER worked in their whole life.
Now, you want a lesson in why the current disparity exist, it's been staring each & everyone of you in the face for the last 13 years,yet, because your snouts were deep in the pig trough of Gordon Brown's 'business friendly' capitalism,with free markets & global trade,you could not see the wood for the trees.
It's all about 'DEFICIT SPENDING', arising out of the need to finance, 'MASS UNCONTROLLED IMMIGRATION', that's why the situation is as it is,it's effects are greater on our future prosperity, than any 'banking crisis', yet virtually NOTHING is or has been done about it.
Your right the world does not owe you living as for the rest your head is in the sand I am good tradesman and I am far from being rich. Carpenters are earning the same as 20 years ago nxt to nothing at 7ph. Oh you get heros that work like trojans and get say 15ph however they will not live much past 60 years being burnt out........ quite price to pay
I too am one of the baby boomers. Born 1946 into a hand to mouth existence. The UK was bankrupt due to fighting two world wars and getting nothing back in return from the countries it saved from oppression - the UK spent so much money in the USA for food and military stores that it paid for the booms that made the USA what it is today. It was still paying back hundreds of millions of loan money every year from these loans, back to the USA until a decade ago.
Life was hard, we made our own toys and played outside all the time. No TV, just radio, and everyone had part time jobs even during school terms. My brothers and I all had jobs delivering rolls, milk, papers, groceries and coal and logs for the fires. We did these jobs early morning, in the evening and at weekends. At 13 years old I earned a grand total of £1. 25 a week, my mum took the pound for the house, put 15 pence into my post office book and gave me 10p all to myself. At Christmas we got an apple, an orange and one toy from our parents, sometimes a small bag of sweets. We lived for the Christmas box of apples that came from aunt and uncle in Canada.
Life was hard, schooling was hard - discipline was enforced by the belt - college was unremitting hard work. But we made this effort in order to get work. My first wage was £2.36p for a 48 hour week. I payed about 55p in total for NI and tax. We all worked hard, saved our money for rainy days and holidays and also for the future. Teenagers actually had to save to get married and furnish their first, usually rented, home. Life was hard, money was tight even with two wages, but we stil continues to save for our "old age" as it was known then. When we retired after working all our lives and paying our taxes and nat Insurances to the government for all that time, we had saved enough to get us through the bad times. Now it seems that the government happily tries to forget all that input of money from us retired people - where did it all go to?. We are now being blamed for living too long and being a drain on the country. We have to pay back all our savings for care we were told we would have for free, paid by our NI contributions. Our savings have now been eroded by countless governments changing the rules to suit themselves and fiddling the books. Finally they want the value of our homes to pay for our care in old age.
Damn all politicians, they have lied and cheated all their lives, robbing the poor and giving it too themselves. We have paid all our lives and are now being ruthlessly cheated out of everything we scraped and saved for.
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