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THE INVESTOR
generation
gain
Once upon a time, retirement planning
was simple: not so for the baby boomers
T
hey are called‘baby boomers’
because of the surge in births
after the SecondWorldWar
but the boom has proved to
be an appropriate epithet for
another reason: their relative wealth.
Increasingly, however, that wealth is being
shared by grandparents and offspring as
part of an intergenerational approach to
financial planning.
For the first time, baby boomers reaching
retirement age have a greater share of the
nation’s wealth than those aged between 16
and 44 – although there are two and a half
times as many of the latter.This new research,
from the Resolution Foundation think tank
1
,
suggests that the gap will keep widening. It
calculates that those entering retirement
accounted for 17% of the nation’s wealth
between 2006 and 2008; by 2010 to 2012,
that had risen to 19%.The share held by those
under 45, by contrast, fell from 20% to 16%
– the first time their share has fallen below
the older group.
Wealth is always likely to rise with age as
greater experience brings promotion at work
and the returns from savings and investments
accumulate. But there are some particular
reasons for the widening gap. First, and
perhaps most important, is the housing
market. Baby boomers were likely to have
climbed onto the housing market early:
in 1991, 67% of 25- to 34-year-olds
owned their own home; by 2013/14, that
had fallen to just 36%
2
.These baby boomers
have reaped the benefits of soaring house
prices, while those who have been well-
advised will have seen the value of their
investments rise with the long-term strong
performance of equity markets.
The older generation also had more secure
employment with better pension provision.
Today, 744,000 people, or 2.4% of the
working population, work on zero hours
contracts
2
; a generation ago, they were
ANALYSIS
By Heather Connon
Getty Images
