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Home Publications Younger cohorts at risk of being less wealthy than earlier generations

Younger cohorts at risk of being less wealthy than earlier generations

Rowena Crawford, David Innes and Cormac O'Dea
Press release

Wealth among working-age households increased on average by more than inflation over the late 2000s, despite the financial crisis. This was driven by increases in pension wealth, which on average more than offset the declines in housing wealth resulting from falling house prices. However, younger cohorts are on course to have less wealth at each point in life than earlier generations did at the same age – unless the rate at which they are accumulating wealth picks up.

These are among the findings of a new report published today by the Institute for Fiscal Studies (IFS), funded by the IFS Retirement Savings Consortium and the Economic and Social Research Council.

The IFS researchers explored changes in household wealth and individuals’ attitudes towards saving over the period 2006–08 to 2010–12. They used detailed data covering the whole of Great Britain from the Wealth and Assets Survey.

Some of the main findings on how households’ wealth holdings changed over this period are:

  • Increases in average wealth for working-age households over this four-year period were driven by increases in pension wealth. After stripping out changes in how future pension income is valued, mean pension wealth increased in real terms (i.e. after adjusting for inflation) by around £13,000 for households aged 25–34, £32,000 for households aged 35–44 and £38,000 for households aged 45–54.

  • Increases in average financial wealth were much smaller (around £4,000, £1,000 and £6,000 for households aged 25–34, 35–44 and 45–54, respectively). Few households hold the relatively risky financial assets that saw volatile returns over this period. For example, only 12% of households directly held UK shares in 2010–12.

  • For virtually all age groups, average property wealth fell in real terms over the period due to declines in house prices. The exception is households aged 25–34, among whom average property wealth increased as some moved into home ownership.

  • Taking all wealth together, the majority of working-age households saw a real terms increase in their total wealth over this period. However, the range of experiences is vast – for example, a quarter of households aged 45–54 saw wealth fall by more than £69,000, while a quarter say their wealth increased by more than £138,000.

  • The rate of increase in real wealth over the four-year period 2006–08 to 2010–12 suggests that younger cohorts are on course to have lower real wealth on average at each age than earlier generations.

“Despite the financial crisis, household wealth on average increased in real terms over the late 2000s, driven by increases in private pension entitlements,” said Dave Innes, a Research Economist at the IFS and an author of the report. “Even with these increases in average wealth, working-age households are at risk of being less wealthy at each age than those born a decade earlier.”

The report also explored individuals’ attitudes towards saving. Some of the main findings are:

  • Nearly half of individuals (47%) in 2010–12 reported saving some income in financial assets over the previous two years. There is little difference in this prevalence of reported saving with age.

  • 30% of individuals reported saving for an unexpected expense, 23% reported saving for holidays or leisure, 15% for planned expenses, 10% for other people and 10% to provide a retirement income.

  • Between 2006 and 2012 the odds of reporting saving for investment purposes halved, while the odds of reporting saving for an unexpected expense increased by 20% and the odds of saving for a housing deposit increased by nearly 60%.

  • Only 35% of individuals who had not yet retired in 2010–12 expected private pensions to be their largest source of retirement income. One third expected their largest source of income to be the state pension, while 8% expected it to be saving or investments, 6% their primary housing and 5% an inheritance.

  • Among households aged 25–34, nearly one-quarter (24%) do not expect to receive any income from the state pension in retirement, while nearly half (44%) do not expect to receive any income from a private pension. However, 28% of individuals expect an inheritance to provide them with some retirement resources.

Rowena Crawford, a Senior Research Economist at the IFS and one of the authors of the report, said: “It is striking how many individuals do not expect private pensions to have a role in financing their retirement, let alone be their main source of income. It will be interesting to see how these attitudes change as auto enrolment into workplace pensions is rolled out.”


Notes to Editors

1. Embargoed copies of the full report, ‘The evolution of wealth in Great Britain: 2006/08 to 2010/12’, are available on request from Jonathan Wood, IFS Press & Communications Manager, on 020 7291 4818, 07730 667013 or

The report will be available on the IFS website from 00:01 AM on Thursday 19th November 2015.

2. The report will be launched at an event ‘Evolution of wealth and attitudes towards saving’ at the IFS at 10.00am on Thursday 19th November. Details:

3. The authors are very grateful to the IFS Retirement Savings Consortium and the Economic and Social Research Council for funding this research. The IFS Retirement Savings Consortium comprises Age UK, Department for Work and Pensions, Financial Conduct Authority, HM Treasury, Institute and Faculty of Actuaries, Investment Association, Just Retirement, and Money Advice Service.

4. The Wealth and Assets Survey (WAS) is a longitudinal survey of the household population in Great Britain. The data are collected by the Office for National Statistics, and the survey is funded by Office for National Statistics, Department for Work and Pensions, Department for Business, Innovation and Skills, HM Revenue and Customs, Department for Communities and Local Government, Scottish Government and Financial Services Authority. Each edition (wave) of the data covers a two-year period. The field work for the first wave covered 2006-08 and interviewed 71,268 individuals in 30,595 households. Data from that wave and two subsequent waves (covering 2008-10 and 2010-12) are analysed in the report published today.