Adults born in the 1980s losing out in income, pensions and housing, IFS research finds
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Adults born in early 1980s have half the wealth that those born in the 1970s had at the same age, a new survey has found.
Those in their early 30s who were born in the early 1980s have average net household wealth of £27,000 per adult, including housing, financial and private pension assets, according to research by the Institute for Fiscal Studies (IFS).
This is about half the £53,000 that those born in the 1970s had at the same age.
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It suggests that those born in the early 1980s are finding it harder than their predecessors to build up wealth in housing and pensions.
IFS research economist Andrew Hood, one of the authors of the report, 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.”
The research found 1980s children have much lower home ownership rates in early adulthood than any other post-war generation and less access to defined benefit pension schemes than previous generations.
They are also 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 an overall stagnation of working-age incomes, but also because the recession hit young adults the hardest.
Rising house prices mean 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 per cent of those born in the early 1980s owned their own homes, compared to at least 55 per cent of those born in the 1940s, 1950s, 1960s and 1970s.
There has also been a divergence in housing costs between those who rent and those who own their own home.
In the 1960s renters and homeowners in their late 20s both spent an average of around 20 per cent of their income on housing costs on average.
Renters born in the early 1980s spent an average of nearly 30 per cent of their net income on housing costs, compared to 15 per cent for homeowners.
Outside the public sector far fewer employees now have access to the more generous defined benefit pension schemes, although the recent introduction of auto-enrolment means that younger people have higher overall pension membership than their predecessors.
Lib Dem Treasury spokesperson Baroness Susan Kramer said: “This is what happens when short term political calculations override the need to build a better future for everyone.
“Year after year, government after government, we are failing to support the next generation, often because the simplest political solution is to focus purely on those more likely to vote.
“We need to redress the balance between generations.
“That doesn’t mean pitting the old against the young, but it does mean ensuring that we put as much store in building more homes, investing in education and creating a fair tax system as we do on vital social programmes for older people.”
Kramer recently introduced a private members’ bill in the House of Lords which would require any new charter for budget responsibility to assess the impact of decisions on intergenerational fairness.