|Date:||29 September 2016|
|Authors:||Jonathan Cribb , Andrew Hood and Robert Joyce|
In their early 30s, people born in the early 1980s have average (median) net household wealth of £27,000 per adult – including housing, financial and private pension wealth. This is about half the median wealth that those born in the 1970s had at around the same age (£53,000).
Differences in the economic circumstances of people born at different times and the role of government policy in exacerbating or mitigating those differences, have risen in prominence in recent years.The Work and Pensions Select Committee is currently conducting an inquiry into ‘intergenerational fairness’. The new Prime Minister included the fact that ‘if you’re young, you’ll find it harder than ever before to own your own home’ in a list of ‘injustices’ she intends to fight.
This briefing note provides an up-to-date and comprehensive picture of the incomes and wealth of different cohorts as they have moved through their lives. It is partly an update of previous work by some of the same authors, which focused on those born between the 1940s and the 1970s. The key finding of that research was that, compared with those born 10 years earlier at the same age, those born in the 1960s and 1970s have no higher takehome incomes; have saved no more of their previous take-home income; are less likely to own a home; probably have lower private pension wealth relative to their earnings; and will tend to find that their state pensions replace a smaller proportion of previous earnings. On the other hand, they expect to inherit more wealth – perhaps the main reason they could still hope to be better off than their predecessors in retirement, on average.
It looks like those born in the early 1980s are likely to find it harder than their predecessors to build up wealth in housing and pensions as they age. They have much lower home-ownership rates in early adulthood than any other post-war cohort, and – outside the public sector – have much less access to generous Defined Benefit pension schemes than previous generations did at the same age.
Other findings include: