Why 60s & 70s children are more worse off than their parents

The Institute for Fiscal Studies (IFS) has issued a report that states that many people born in the 1960s and 1970s will be poorer overall than their parents – putting an end to the post war trend for each generation being better off than the last.

With the lack of pay rises, dwindling home ownership, poor pension savings and lack general savings many people are being forced to rely on inheritance for them to be able to live comfortably for the rest of their lives. Savings

Income

People born in the 1960s and 1970s have been hit hard by stagnating wages over the past ten years. They benefited from an income growth in 1974 and 2002 when median income rose by 1.5% a year, however the IFS did point out that this growth was disproportionate because the highest incomes grew at a much faster rate than the lowest. Since 2002 median incomes have grown by only 0.1%, affecting those born in the 70s who were on average incomes of £570 a week by the time they reach 40 compared to £610 for those born in the 60s. Their parents did not have this problem with wage stagnation at a similar age so they benefited from decent income growth up to the 1960s. Following the financial crisis in 2008 the IFS found that future income prospects for the 1960s and 1970s cohorts ‘do not look good in the short term future either, or arguable even in the medium term’.

Property

Property is the biggest asset that the majority of individuals accumulate in their lives – it is also an indicator of the overall wealth of different generations. There is a difference between those born in the 60s who tended to get on the housing ladder earlier compared to those who were born in the 70s. For the people born in the 40s and 50s, homeownership rates peaked at about 80% by the age of 50, the IFS has said it is unclear whether this will be the case for those born in the 60s. People born in the 70s have been affected more by falling incomes, the boom in property prices in the 1990s up to the mid 2000s and also by saving less money. People aged between 37 and 43 are now lagging behind those 10 years older than them – by age 35, 66% born between 1970 and 1976 owned a home, compared to 71% of those born in the 1950s and 1960s.

Pensions

Private Pensions

Those born in the 60s and 70s were more likely to be a private pension saver in their 20s and 30s than their parents – the IFS puts this down to the introduction of personal pensions in the 1980s. But the report states that a ‘rapid switch’ away from well funded company pension funds has hurt those born in the 60s and 70s where their parents will have benefited. The younger generation born after 1980 are the ones who will be taking the biggest hit in terms of workplace pension saving, this is because they have been most affected by the closure of the gold-plated final salary schemes in the private sector over the past 15 years. In 1997, defined benefit pension schemes accounted for 74% of private sector pension plans, now they comprise just 29% of the total, and continue to be displaced by less generous defined contribution schemes.

State Pensions

The state pension system peaked for those born in 1933, at this age people got the best out of the State Earnings Related Pension Scheme (SERPS) which provided a top-up to the basic state pension and was introduced in 1978. People born in the 1960s and 1970s will be taking their pension under the new single-tier rules that will be introduced in 2016, giving people a flat-rate expected to be around £155 a week. The IFS found that higher earners born in the 60s and 70s will find this new state pension will not cover as much of their working income as their parents (born in the 30s and 40s), though lower earners will only get slightly less than those born in the 1940s and more than those born in the 50s. The rising state pension age will ‘stop the rise in generosity’ of the state pension system as would have happened had the age remained the same and life expectancies continued to grow.

Savings

Those born in the 70s particularly preferring to spend rather than save. The IFS has found that those who saved the same proportion as their parents during the years before 2002 would be ‘left with higher stocks of wealth’ because of their higher incomes during that time. However this is not the case if these people chose to spend rather than save when they were young adults – the report found that these people saved less than their parents had with a savings gap as high as £60 a week between those born in the 1940s compared to those born in the 1970s at the same stage in their lives.

Britains over 45s believe that they will retire with assets valuing up to £500,000

Despite the growing anxiety about what future retirees may face and their struggle to save for retirement, the majority of the 2000 over 45s surveyed feel bullish about their later life plans with 9/10 of them estimating that their property will be worth less than 50% of the total. The current average house price stands at £245,495 – skewed by the high cost of houses in london, Partnership has calculated that these people would be worth a minimum of £490,990 by the time they retire. This figure questions whether this 90% will genuinely hold assets worth that much when they come to retire or if they are grossly overestimating the amount they will have in their pensions and savings.assets

British workers between the ages of 45-54 are being described as the ‘lost generation’, research has found that half of this age group have not been making financial plans for retirement. Along with this having dependent children and the rising cost of living have been squeezing people’s budgets and incomes with Blackrock – an investment firm who carried out this research estimating that this age group are only saving 12p from every £1 that they earn. They also stated that many in this age group have large misapprehensions about their wealth when they retire. Ged Hosty of Partnership has said that “while people over the age of 45 have arguably benefited from the rise in house prices, many people simply don’t realise this and are widely optimistic about their retirement provision”, the research also suggests that many people between the ages of 45 and 65 have not given serious thought to what their net worth is – something that needs to be done before retiring.

Pensions consultant Malcolm McLean suggests that 45s and over should properly assess their financial situations to ensure they are saving what they need to retire comfortably. He stated that “because there has been a tendency over recent years to start families at a later age, many middle aged people now still have young children to care for and in some cases they now need to care for their elderly parents”.

If you are struggling with your finances and need some support there is help out there, charities, citizens advice centres and debt management companies can all help you take control of your finances to help you figure out your future in a positive way.

What finance articles can I write to help people reading the blog?

Everyone has problems with their finances that they need help with. The right finance article can actually be life changing. It can help the person get out of debt, save for a college education or provide the kind of lifestyle that they dream of. But, choosing what type of finance articles to write for your readership can be challenging. Read on and learn how to choose the right kind of finance articles for your readers.Finance

Understand Your Readers Problems

Before you can starting writing for your readers you need to understand their problems and challenges. Are your readers struggling with debt? Are they trying to save up for their own home or their children’s education? Do they have problems understanding how to invest in the stock market? Finding the answers to these questions isn’t difficult. One way is to visit personal finance forums and see what types of questions people are asking. Another way is to visit Yahoo Q&A and look at the queries that are being posted.

Focus On A Specific Area

Finance is a huge field and so when you are first writing articles you focus on a specific field. These fields can include investing, debt, saving, budgeting, education and financial automation. Once you have decided on the field that you are going to focus on you may want to refine your topic even more tightly. For example if you are writing about debt you could focus on student loans, mortgages or credit card debt.

Choose Hot Topics In Your Area

Once you have established an area that you will focus on, next you need to choose some hot topics in that area. Let’s say that you want to write about budgeting. You could cover topics such as top ten ways to reduce your electricity costs, why you should use public transport, how to reduce your grocery bills. Topics that are a little controversial are often a great way to get attention and to establish your reputation.

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What are the best ways to begin blogging?

Choosing the subject is by far the most important part of blogging and should be considered carefully. The topic should be something that the creator is interested in and knows a lot about, or should be something that the creator would like to learn a lot about but is not well knowledged in. A popular subject is usually something that the creator has close access to and is able to draw a lot of information from. This could be examples of recently cooked meals, or tales of a grumpy gold fish that sits in a tank in the living room.Blog

Setting yourself a daily goal is a good idea when creating and developing something such as a blog. A target of at least one upload to the blog each day may be a suitable goal. This upload could be in the form of a blog post or an image upload. Practice is an important of any creative skill and a blog is no different. Having regular practice on a daily basis is a perfect way of keeping your blog in good shape.

The first thing one should do when blogging is make each post feel human. Don’t sound like a robot when you discuss your topic. Also don’t be afraid to throw in jokes and keep things rough around the edges. This will essentially be more interesting to the reader than something that is cold and clinical.

Choosing a title for each blog post is important as it is this line of information that will draw in the reader. First impressions are crucial in any situation and are especially important when attracting attention on the web. Making the content on a blog scannable is also important. One who has not seen the blog before should be able to scan through the contents and quickly gather an idea of what the blog is about. This can be achieved by including images, bold text, lists and sub headings. These elements should be considered in any part of a blog post when ever possible.