Wednesday, July 8, 2020

Young at risk of being less wealthy than earlier generations

Younger workers are on course to have less wealth at each point in life than earlier generations did at the same age – unless the rate at which they are accumulating wealth picks up according to the Institute for Fiscal Studies (IFS).

The IFS researchers explored changes in household wealth and individuals’ attitudes towards saving over the period 2006–08 to 2010–12 and found iyoung people today are less financially secure than previous generations.

Increases in average financial wealth were much smaller – around £4,000, £1,000 and £6,000 for households aged 25–34, 35–44 and 45–54, respectively. And, the rate of increase in real wealth over the four-year period 2006–08 to 2010–12 suggests that younger cohorts are on course to have lower real wealth on average at each age than earlier generations.

“Despite the financial crisis, household wealth on average increased in real terms over the late 2000s, driven by increases in private pension entitlements,” said Dave Innes, a Research Economist at the IFS and an author of the report. “Even with these increases in average wealth, working-age households are at risk of being less wealthy at each age than those born a decade earlier.”

 

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