IFS - Those born in early ‘80s have about half the wealth that those born in ‘70s had at same age
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).
This is among the main findings of new IFS research published last week, which for the first time looks at both the overall household wealth and total income of different generations.
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:
- Those born in the early 1980s were the first post-war cohort not to enjoy higher incomes in early adulthood than those born in the previous decade.This is partly the result of the overall stagnation of working-age incomes, but it also reflects the fact that the Great Recession hit the pay and employment of young adults the hardest.
- Those born in the early 1980s have much lower home-ownership rates in early adulthood than any generation for half a century. At the age of 30, only 40% of those born in the early 1980s were owner-occupiers, compared to at least 55% of the 1940s, 1950s, 1960s and 1970s cohorts.
- In their late 20s, renters born in the early 1980s spent nearly 30% of their net income on housing costs (largely rents) on average, compared to 15% for homeowners (largely mortgage interest). At the same age, renters and homeowners born in the 1960s both spent around 20% of their income on housing costs on average. Hence, the decline in homeownership has been accompanied by a divergence in the costs paid by renters and homeowners
- Outside of the public sector, those born since 1970 have much less access to generous Defined Benefit (DB) pensions than previous generations did.In their early 30s, less than 10% of private-sector employees born in the early 1980s were active members of a DB scheme, compared to more than 15% of those born in the 1970s and nearly 40% of those born in the 1960s. The recent introduction of ‘auto-enrolment’ means that younger cohorts have higher overall pension membership than their predecessors did but at much lower levels of generosity.
Andrew Hood, an author of the report and a Research Economist at IFS said: “By the time they hit their early 30s, those born in the early 1980s had about half as much wealth as those born in the 1970s did at the same age. Sharp falls in home-ownership rates and in access to generous company pension schemes, alongside historically low interest rates, will make it much harder for today’s young adults to build up wealth in future than it was for previous generations.”
Notes to Editors:
The Economic Circumstances of Different Generations: The Latest Picture by Jonathan Cribb, Andrew Hood and Robert Joyce has been published on the IFS website here: https://www.ifs.org.uk/publications/8583
Funding for the research from the ESRC-funded Centre for the Microeconomic Analysis of Public Policy at IFS (grant number ES/M010147/1) is gratefully acknowledged.
30/09/2016DatasetsData for Briefing Note 187 - The economic circumstances of different generations: the latest picture
29/09/2016Briefing NoteThe economic circumstances of different generations: the latest picture
Latest News from
IFS - End of furlough likely to be particularly tough for older workers17/06/2021 11:35:00
While a lot of the focus on the employment effects of the pandemic has, rightly, been on the young, employees over the age of 65 were 40% more likely to be furloughed in late April than those in their 40s (14% versus 10%).
“The Bank of England should end its asset purchases now”: IEA expert comments on ONS inflation figures17/06/2021 10:35:00
Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, responded to consumer price inflation figures published by the Office for National Statistics, which show inflation has jumped to 2.1 per cent
IFG - Covid-hit public services could be further disrupted by government targets17/06/2021 09:35:00
Government targets in public services may do more harm than good, warns a new paper from the Institute for Government.
Delay to roadmap could lead to “a further rash of business closures”: IEA expert comments on ONS labour market figures15/06/2021 13:30:00
Professor Len Shackleton, Editorial and Research Fellow at free market think tank the Institute of Economic Affairs, commented on the labour market figures from the Office of National Statistics showing the unemployment rate has fallen to 4.7 per cent
“Chancellor right to reject calls for furlough extension”, says IEA expert15/06/2021 12:30:00
Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, commented on calls to extend the furlough scheme
Civitas - Study finds over 80% CofE dioceses appoint clergy who advocate racial justice activist claims & over 70% promoting climate activism – marking Church’s ‘separation of the head from the body’10/06/2021 11:35:00
In a new report, researchers have set out to investigate the scale of support for ultra-progressive radical activist agendas alleging ‘systemic racism’ in English society, the understanding and use of ‘unconscious biases’ and prescribing a ‘climate emergency’ doctrine within the Church of England.
‘Special relationship’ can thrive if UK forges new green trade agenda with US at G7 summit – IPPR report10/06/2021 10:35:00
Ahead of the G7 leaders’ summit in Cornwall, the IPPR think tank is urging the UK to spearhead efforts to rewrite the rules of global trade.
IEA - “Social distancing rules must go on 21st June”: IEA expert responds to ONS data on UK pubs and bars sector10/06/2021 09:35:00
Christopher Snowdon, Head of Lifestyle Economics at free market think tank the Institute of Economic Affairs, responded to figures from the Office for National Statistics showing that 55 per cent of pub staff are still furloughed and only 24 per cent of pub owners have “high confidence” that their business will survive the next three months
‘Bitter irony’ that health and care staff are made ill by their work: The King’s Fund response to the Commons Committee report on workforce burnout and resilience08/06/2021 11:35:00
Suzie Bailey, Director of Leadership and Organisational Development at The King’s Fund, responded to the Health and Social Care Committee report on workforce burnout and resilience in the NHS and social care