Post-war pensions boom ‘is coming to an end’
Only people who receive a large inheritance will be able to enjoy a more comfortable old-age than previous generations, Institute for Fiscal Studies report finds
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By Sam Marsden
12:01AM GMT 17 Dec 2013
People born in the 1960s and 1970s face becoming the first generation since the Second World War who will be worse off than their parents in retirement, a new study has warned.
The children of these decades are less likely to own a property, will have smaller state and private pensions, and have no more savings or income than their predecessors.
The only way in which they are better off is that they believe they are more likely to receive an inheritance, the Institute for Fiscal Studies (IFS) economic think-tank found.
Only those who receive a large bequest from their parents or grandparents can expect to enjoy a more comfortable retirement than the generations who came before them, the report concluded.
However, experts cautioned that in many cases old-age care costs will eat up much or all of the money that pensioners had hoped to leave their children despite a Government pledge to introduce a £72,000 cap on the bills.
The findings represent an end to the steady rise in incomes and living standards enjoyed by successive generations since the end of the Second World War.
The IFS study found that those born in the 1960s and 1970s actually earned more in early adulthood than their forebears did, but had failed to build up bigger savings pots because they spent all the extra money on maintaining a better lifestyle.
At the age of 30, people born in the 1970s were paid three-quarters more than those born in the 1940s took home at the same stage in their lives.
But the younger generation put away about £60 a week less than those who grew up in the immediate post-war period as savings rates declined significantly across all age groups from the late-1990s onwards.
On top of this, salary growth has slowed down over the past decade, in particular as a result of the financial crisis.
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