Wealth

This report examines how household incomes were changing in the UK up to the eve of the COVID-19 pandemic, and how other measures of household living standards have changed over the course of the pandemic.

At this event, researchers shared findings from two new reports, examining when individuals should save for retirement – given factors like earnings growth and children – and how employees save in practice.

Inheritances have been growing as a share of national income in the UK since the 1970s. This trend looks set to continue as generations at older ages

The last decade has seen considerable change to the pensions environment. This event included a keynote talk from the Minister for Pensions and Financial Inclusion, a presentation on a programme of IFS research in this area over the last two years, and an expert panel discussion of the implications of the research.

People on middle and higher incomes need to save privately for retirement, but deciding when and how much to save is difficult. One particular trade-off people face is how much to save in a pension and how much to save for, or spend on, owner occupied housing. In new research published today we examine interactions between housing and and pension saving at two distinct stages of life.

The proportion of the self-employed saving in a private pension has declined dramatically over the past two decades, leading to continued concerns about their financial preparations for retirement. At this event we presented the findings of new IFS research that has examined this trend.

The COVID-19 crisis has brought to the fore increasing concerns about inequalities not only between different population groups – such as the gap between the rich and poor, young and old, and different ethnic groups – but also between people living in different places. Even prior to the crisis though, there was a sense that the UK is not only a highly geographically unequal country, but also an increasingly geographically unequal one.

Recent decades have seen rising wealth-to-income ratios. In England, increases in wealth have been concentrated among older generations. Those born in the 1980s have accumulated no more wealth than those born in the 1970s had done by the same age, but the parents of those born in the 1980s hold 40% more wealth than the parents of those born in the 1970s held at the same age. One consequence is that inherited wealth is on course to be a much more important determinant of lifetime resources for today’s young than it was for previous generations. New work by IFS researchers, funded by the Nuffield Foundation and released today, estimates that the average (median) inheritance of the 1960s generation will be worth 8% of average lifetime earnings for that generation, rising to 14% of lifetime earnings for the 1980s-born generation.

This report examines how living standards – most commonly measured by households’ incomes – were changing in the UK up to approximately the eve of the current COVID-19 crisis, using the latest official household income data covering years up to 2018–19.