• Text size      
  • Send this article to a friend
  • Print this article

Risk lies ahead of rising inequality

Our cultural narrative about baby boomers is that they are a special generation; better off, more active, with better diets and more comfortable lifestyles than the generation before them.

While there has always been an element of mythology about this, there is truth in it too.

Covering those born during a spike in births in the years immediately after the Second World War, and on until the early 1960s, the baby boomers represented a rejection of traditional values, it is suggested. They were also more well off than any generation before.

But this is not the case for those who were born late in the period, according to a new report, or their contemporaries. 'Late' boomers, born in the 1960s and those born in the 1970s will not be better off in retirement than their predecessors, according to the report from the Institute for Fiscal Studies.

Instead, unless benefiting from inherited money, they are likely to have a less generous state pension, lower private pension wealth, and to have saved no more of their take home income than their predecessors.

This is surprising, because this group have been better off during their working lives. The point being made by the IFS and the Joseph Rowntree ­Foundation, which funded the report, is - essentially - 'they spent it all'.

This will entrench existing ­inequalities, the report suggests. While up to 70% of those born in the 1970s are expecting an inheritance, they tend to be those who are already wealthy and they are more likely to have partners who also expect an inheritance.

There is a question at the heart of this about what better off means, of course. We are all living longer, benefiting from more opportunities generally and a higher standard of living than in previous generations. It may be that for those born in the years covered by the report, the lack of material wealth may be compensated for by other riches.

But there is increasing evidence that inequality damages society and that the UK is already one of the most unequal countries in the western world, with the lowest levels of social mobility. Anything which exacerbates that is a significant concern.

Meanwhile, the lack of savings for retirement and the general flatlining of wealth for those born in the 1960s and 1970s has implications for ­following generations too.

Tory frontbencher David Willetts has already explored this in his book The Pinch - provocatively subtitled How the Baby Boomers Took Their Children's Future, and Why They Should Give it Back.

As he argued, those born in the 1980s and later face an increasing struggle to maintain their standard of living. They draw less benefit than they pay in from the welfare state and in many parts of the UK they struggle to get on a starting rung on the housing ladder.

Rather than being no better off, these generations risk being much worse off than their parents. Facing rising costs for daily living and for future planning such as pensions, they also face ­working into their seventies. Will they feel that better health is a satisfactory trade off, or will they reject responsibility to a society which has ill-served them? This is the real concern.

Contextual targeting label: 
Finance

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

200483