What happens when the baby boomers die?

[LargeSquareRock]

Sorry about the title, but that’s literally it. I’ve wondered this since I was a child.

Obviously we are about to enter a 20 year spike when a smaller number of tax payers support a higher number of elderly people in healthcare and elder care.

What happens in 20 years when the spike is over? Do we have empty care homes, plentiful housing and easily available health care?

I really have no evil agenda asking this- demographics has always fascinated me.

@Monkeytennis97 gen x - 1965- 1980 - so that would have me giving birth between ages 4 - 19. Gen X are my younger siblings, whose children are Millenials.
There will be overlap of course, some Gen X’s will have had parents from the late 1940s / early 1950s, but in my case, as a childless boomer, it’s my millennial nieces and nephews who may benefit from any inheritance of mine. But it’s not a straight line .

Again the broad definition of boomer years doesn't help here.

I was born in 64 - my kids were born 2000/2002 Gen Z.

Very much depends on what happens in the budget in October and for subsequent years.

If - as some rumours suggest - there will be changes to inheritance tax and capital gains tax, then lots of houses could suddenly come on the market. One rumour is that CGT may be charged on inheritances, but with the death restart benefit removed. So, currently, if you inherit a house and sell it you’re charged CGT on the difference between the value at point of inheriting and the value at sale.

Apparently there are calls to change this, so the CGT tax is calculated on the difference between sale price and original purchase price.

So if someone bought a house for £20,000 in 1980 and it sells in 2024 for £260,000, the inheritor will have to pay CGT on £220,000. If CGT is aligned with income tax this is £44,000 at the 20% tax rate and £88,000 at 40%.

If IHT threshold is also reduced to £200,000 then additionally IHT would be charged at 40% on £60,000, so £24,000. For someone on the 20% tax rate they lose £68,000 and £112,000 on the 40% rate.

If IHT threshold is reduced to £100,000 then the IHT due is £64,000 and 20% tax inheritors lose £108,000 and 40% taxpayers lose £152,000.

If that happens then owning immovable assets such as property is going to be less attractive. Better to spend the cash on holidays and good food and wine and rent somewhere to live. This also frees up cash to give your children to spend as they wish - assuming a lifetime gift allowance doesn’t happen which is another rumour!!

If people stop buying houses then the housing stock will likely be purchased by local authorities who currently have far greater demand than supply. Large company landlords may also buy but that depends on any tax increases targeted at businesses.

Another alternative is that imposing such charges causes house prices to nosedive, but unless it’s a managed slow decline I’m not sure that’s a good thing for the economy or individual finances!

Alternatively, if wealthy keep moving home every few years so you never build up much additional equity on your house. That way there won’t be a big CGT bill for whoever inherits. But that isn’t feasible for those who can only just afford their mortgage as moving is expensive - stamp duty, solicitors fees, moving contractors etc etc.

So, in 20+ years time the hold of private property in this country could look very, very different from that today.

Sill, I’m sure someone clever has been thinking about this very, very deeply…

@Dearg maybe I'm wrong but I presumed the birth rate from those older boomers (1946-1955) would have been higher than the later boomers and therefore more gen X's would be around.

Speaking as a gen X myself who falls into this category. I could be completely wrong though! 😊

So yes, but I’m Gen X with Boomer parents, healthy in their late 70s. I expect them to live for at least another 10 years by which time I’ll be in my mid 50s and have had a lifetime to build my own finances, buy a house and pay off the mortgage.
My kids will be in their mid 20s to mid 30s when their Boomer grandparents die, we don’t need the money so our kids will receive the bulk of the inheritance AND at a time when house prices might have come down as there will be more houses both built and coming onto the market.
Gen Alpha will be the lucky generation!

Agreed £41k seems too low….as an approximation, a quick google shows there are roughly 35 million taxpayers in the UK, and HMRC raised £277 billion in 23/24 from income tax. So that’s just under £8k per taxpayer. To pay £8k in tax you don’t need to earn that much - around £52k.

That’s still a lower number than I’d have guessed…but I suppose you need to earn that every year of your life, once you’ve started work, for it to work. So assume you start work at 21 and live to be 82 you need to earn £3.2m in your lifetime to pay enough income tax to cover your share of the income tax receipts. And if you only work to 60, then that’s 39 years to earn £3.2m…or &82k a year for every year you worked.

Now, how don’t know how meaningful that guesstimate is, as 60% of income tax comes from higher or additional rate taxpayers so the break even point is probably wildly different…. And also, it excludes NI, which raises another £180 billion from employers and employees. As a sense check, £180 billion over 35 million tax payers is around £5k each, which only needs a salary of around £45k.

Back to the OPs original question, the change in population will be gradual. There’ll be no massive sell off of assets or redeployment of government spending…it’ll just gradually happen. At a UK, and specifically England, level I would expect to see a continuing trend of population moving south. Despite brexit immigration has continued to increase, which will continue to soften the rate at which tax receipts decline.

I think I understand what you're asking. It's not about the tax (although, there will eventually be less working/self funded adults so the £amount of tax being taken will reduce, but there'll also be less adults needing services, will it balance out?).

It's what will things be like? At the moment we have lots of older people, less younger adults and less (again) children. When the boomers die, we'll have less older people and even less younger adults. Will we also have even less children? Or will the children of now (the younger adults of then) have more children and then in a few decades we'll be back in the same position?

Or will it always be an upside down pyramid, but with the numbers in each demographic getting smaller?

The more I think about it, the more questions I have.

I haven't read the whole thread so this may have been addressed, but projecting numbers must be a very complicated business. The very elderly and frail currently taking a lot out of health and social care are fewer in numbers than the Baby Boomers now in their 60s and 70s, but their health now has to be poorer because they were all born before the NHS, many of them would have had very poor health care, diet and education growing up and a large number would have done heavy manual work in polluted conditions causing all sorts of occupational health conditions like asbestosis.

So yes, as the Boomers get older there will be more of them, but they are probably also mostly in better health, so their demands on the NHS may not be quite as high. Hard to predict because if lots of us (I'm a Boomer) live into our 90s we're bound to have more health problems by then as the body eventually just wears out, no matter how healthy you've been earlier on.

After that, it's anybody's guess. Obesity was very rare when I was growing up in the 1960s and 1970s. My generation has plenty of overweight members who could do more exercise, but at least we didn't have those issues in childhood. Many younger than us have had these issues all their lives. Healthy life expectancy could start to fall.

Cheery subject, but as you say, fascinating.

In Australia (where the op is) the first generation who’ve benefited from compulsory super are retiring, so more than you’d think will have a super lump sum they can also draw on.

I think I get what you’re saying @StarrySkiesAtMidnight but surely if they did that, then fewer people would sell the house they inherited? They’d just live in it for a while and then sell as the primary residence? Or keep hold of it and rent it out instead?

If that happens then owning immovable assets such as property is going to be less attractive. Better to spend the cash on holidays and good food and wine and rent somewhere to live

Only if they fix the rental market - to give more security to private rentals and the % increases allowed in rent.

I didn't want to be renting in old age - not because I wanted a house to pass on - but because I wanted not to be paying every increasing rent out of a fixed and likely poor pension. I also wanted to be done once we had kids with insecurity - of needing a lot of ready cash to pay for moves - as even back then it was pricy.

Our parents would like to give us some inheritance - which they only have houses but it will be taxed and it will be split multiple ways. Might make a difference to our kids if they get a share - but won't impact on siblings in same area with expensive housing who will be at such time in 50s if not 60s and in both cases it may go into care home costs to provide for our parents latter years.

But I agree tax situation can hugely affect things - in wales council tax is some areas on second home is now 200% and is is apparently putting second homes on the market - though local business in seaside towns aren't pleased in press as they worry their year round business will go seasonal again.

The other issue with the calculation about CGT and IHT are that if Labour go too hard, they’ll just be voted out at the next election anyway. The fuss being made about £300 being taken away, can you imagine what it would be like if IHT was suddenly thousands more?
Labour have done a clever “testing the water” with the £300 payment removal to see what people’s feelings are - before they decide what to do in the Budget.

No one would choose to rent in old age - it’s way too unstable.

My grandfather age 88 has loads of cash coming in. State pension, fire service pension, attendance allowance and a smaller pension from a local authority job he took at 55. He pays tax on everything except attendance allowance.

An awful lot of the people in care and dying at the moment are the people born during the war, who'd now be in their early to mid-eighties. Except for the very poorest and very richest few, they'd have had the healthiest diet ever in their childhood, centrally imposed by the state to ensure a balance of nutrition with the minimum of calories required to sustain an active life.

On the downside, they'd be very likely to have smoked.

In 2035 there will be more people retired than working and paying into the system. Taking into account the 14m people of working age receiving benefits the situation will be quite tricky.

Anyone who will be retired in 2035 should be concerned about size of state pension going forward. Equally those who receive other benefits may also see smaller benefits compared to today.

I believe currently only about 4% of estates are liable for inheritance tax. Thanks to the Tories, if a married couple own a house worth up to £1m they can pass it on to their children and grandchildren without paying a penny in tax. I think this is wrong. That is a life-changing amount for the lucky few who get it. Why shouldn't a small amount be taken to help pay essential public services? People like to chunter on about tax, but the flipside of tax is it pays for public services, and we all know how bad a state many of them are in. So if Labour make changes to raise more Inheritance Tax, I'll be supportive, and if they're clever in the way they spin it, I expect most people will be.

There was a big fuss about saving everyone in Covid, especially the oldest

Wealthy overseas investors will buy them up and leave them sitting empty . . . Ie Oligarch types from unstable countries will want to use them as banks and a safe way of investing their money?

In 2035 there will be more people retired than working and paying into the system

Where have you read this?

Quick google is telling me that is wrong - yes 2035 there will be an increase in ratio of retired to workers - but it's not till 2070s it's currently project that there will be more retired than workers - plus that can change with immigration.

FFS OP, I'm a baby boomer and contribute far more to society than any other generation since, AND, I'll have you know, have NO plans to die any time soon!!!

😂

Just kidding... It's hard to gauge, especially as things might be very different by then as a result of the pressures over the next 20 years? e.g. perhaps assisted dying will become more acceptable than rotting away for years in an expensive care home... or extended family living arrangements might have become more widespread.

I suspect that wondering about shifts in resources and funding is a pointless exercise because the whole structure of society as it relates to e.g. elderly care could fundamentally change.

Because old people are much more likely to vote and governments don't want to bite the hand that they hope will feed them.

True about the diet and smoking. If my parents were typical, though, as soon as rationing finally ended, they made the most of unlimited access to sugar!

Well my 75 year old boomer mum is homeless in our spare room, never owned property and has barely paid any tax in her life. No private pension either! She doesn’t cost the NHS anything at least because she refuses medical treatment despite needing it. Lots of massive assumptions here…

or extended family living arrangements might have become more widespread.

I think fact UK tends to smaller house sizes than developed country average - may inhibit this.

I know our parents looked into downsizing but found the expense and the available properties made it very unattractive - so it's not like housing stock is matching the current needs now.