A new report has revealed during every stage of their lives young people will be worse off than the generation before them…
New analysis from the Institute for Fiscal Studies (IFS) has revealed this generation will be poorer at every stage of their life than their parents.
The study is not the first to suggest young people are worse off than the previous generation. Research published less than a month ago from Equality and Human Rights Commission said those under the age of 34 were hit the hardest by a fall in income and reduced employment opportunities.
The report “Is Britain fairer?” showed the difficulties facing young people today. It found those between 16 and 24 were less likely to have access to decent housing and were more at risk of living in poverty.
The new report from the IFS acknowledged that households became wealthier during the financial crisis, but said this was due to the increase in pension values between 2006-12. However, the slow rate of growth in overall wealth suggested young people would lag behind previous generations.
Author of the report and research economist at the IFS Dave Innes commented: “Despite the financial crisis, household wealth on average increased in real terms over the late 2000s, driven by increases in private pension entitlements.”
Pension wealth rose for households aged 45-54 during the period, reaching an average of £38,000.
Innes said that even with these increases in average wealth, there were still issues, stating “…working-age households are at risk of being less wealthy at each age than those born a decade earlier.”
The research found a quarter of households aged 45-54 saw a decline in wealth of more than £69,000, but a quarter in this same age bracket saw an increase of more than £138,000.
Additionally, the analysis also found significant differences in attitudes towards savings and pensions. Around 30 per cent said they were saving for unexpected expenses and 23 per cent said they were saving for holidays or leisure activities.
A further 15 per cent were saving towards planned expenses, 10 per cent for other people, and 10 per cent to provide for retirement.
However, in the lower age bracket (25-34) the picture looks bleaker. Nearly one-quarter (24 per cent) said they had no expectation of income from the state pension during retirement, but worryingly one third said it would be their largest source of income after retirement.
Furthermore, nearly 44 per cent said they did not expect to receive any income from private pensions, despite legislation automatically enrolling workers on pension schemes.
Another author of the report, Rowena Crawford, who is a Senior Research Economist at the IFS 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.”