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Poorer Than Your Parents?

In Britain, the Guardian indicates that it is no longer believed that new generations have better living standards than previous generations:

the Institute for Fiscal Studies (IFS) said its research showed the days when each generation could expect to be better off than their predecessors might be ending.

…found that a decade in which real incomes have stagnated – coupled with changes to pensions and high house prices – has made life tougher for people currently in their 30s, 40s and early 50s than those born earlier.

Workers aged from 34 to 53 are being punished by inadequate pay rises, dire pensions and crippling housing costs. With meagre savings, their only hope of a comfortable retirement is a large inheritance.

Equalized cohort Income UK

Generation Stagnation – 1970’s generation receives higher income earlier, but significant decline before middle age

Equalized Savings by Cohort UK

Declining income with higher living expenses translates into negative savings rates

Declining Retirement

Most importantly, there is no safety net for private employees’ retirement

Posted in Economics.

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