Generational wealth differences

[KeenGreen]

My first AIBU so let’s see what I’m in for!

First to make clear none of the problems now are the fault of previous generations. It is not a blame game!!

So AIBU to be frustrated with the rhetoric that todays generations of young families have it no harder than previous generations in terms of wealth and they just need to be more frugal to have the same standard of living??

I am sick of hearing the idea that older generations. So called boomers (for the record I don’t like this term) didn’t have it easier than younger generations.

I am 38 I have worked since I was 16, lived independently since 17. Put myself through university all the way through to PhD. My husband is 39 works in a school as support staff (LSA) and takes up circa £1200 a month. He has a degree.
I work in a university and earn just under £50K before tax so our household income is probably about £65K not the lowest by any stretch but enough for us to struggle to balance costs. We claim child benefit but otherwise no extra help.
Husband only works term time of course, but that means he’s around for our child during holidays.

We have one DC age 5, and can’t afford any more.
Our closest family lives over 2 hours away, so we have no family support with childcare or help if there is a sick day or anything.

We have a mortgaged small semi detached 1930s house with 3 bedrooms, It needs a lot of work but we haven’t been able to do much because of time and money. Current mortgage fix ends in 2026 and I expect our mortgage repayments to go up by about 50% extra £300 a month.

We pay off student loans and my pension contributions are also high.
I took only 6 months maternity leave because I couldn’t afford to go to half pay for long and not into no pay at all.

My husband had virtually nothing in his workplace pension because of low earnings.
Mine is keep being devalued because of sector changes and it’s definitely not the best pension in education. (Teachers pensions are better).
I can’t even imagine what it will be like to try and live off my workplace pension alone and I would have to go all the way up to retirement age which I can’t imagine myself doing in a stressful job.

Retirement age for us is currently 68, that means we have 30 more years.
But with the way things are going I have no hope that there will be a state pension at all for us, or the age will be pushed even higher, so will probably be dead! Despite the fact I will have been paying in with tax national insurance for 50 plus years by that point.

I just feel frustrated about this idea that I hear people say that our generation just needs to work harder, or get better paid jobs etc because it’s not that easy. We both work hard in the education sector. Enjoy our jobs for the most part and find them fulfilling albeit stressful at times!

Like I said not about blaming previous generations for the picture we are in, but I don’t like the rhetoric of ‘well interest rates went up to 15% in my day’ etc when house prices were so much lower in proportion to wages and the cost of living right now and inflation over the last 10 years shows wages haven’t increased in line with this.

ps I know we are not the most hard done by! But still feel the pinch and we certain don’t live an extravagant lifestyle!

I know how you feel. My partner's parents were able to buy their 3 bed council house for £4000 and next door to them have just sold for £168,000. My partner's granny bought hers for £8,000 and they now rent it out for £650 per month now she's passed away. We live in the same house a few doors away from these two and pay £700 per month. My MIL took 10 years off working to raise her 3 children and I can't even afford to take 1 year off. Also my partner works 2 jobs to get by.

It is a good point though with people generally living longer, with immigration and with the growth of single adult households it’s far from certain we will see any significant difference in demand for quite some time.

In terms of house prices/rent rises vs salary increases the situation has certainly got worse throughout my adult life. I thought by now there would have been a period where house prices would drop or at least stop rising in absolute terms to move towards buying being more affordable but it hasn’t happened as yet.

It's all down to a few things.
Pre boomer generation had many more workers supporting them, they didn't live as long (because of smoking and health care generally poorer and cheaper). This was the demographic model when universal benefits, pensions, health care, etc were introduced.
So the Boomers had relatively few older person benefits to support, they could buy a house with one person's income so most didn't need two incomes and chose not to work and instead be a homemaker/rear children. They got free education, universal benefits and the national debt started to creep up.

As the birth rate stalled and the pyramid started to fatten at the top (as that baby boom aged). The universal benefits started to be trimmed and working age taxes were piled on to pay for increasing health and pension costs for this group. They were pandered to by successions of governments as they vote in huge numbers. They were never financially encouraged to downsize from their family homes, despite the children leaving the nest, this caused underoccupancy of housing stock.

So now the next generation have no child benefit if they are high earners, they have student debt, they have house prices which are many multiples of earnings 3-4 times higher than the boomer generation. They have more debt, both are forced to work to get on the housing ladder, are having fewer children as a result as they have to pay for childcare.

So yes the next generation do have it tougher, an absolute fact. But, this is only the tip of the iceberg. Govt debt has now gone above 100% of GDP, the last time this happened was during WWII. This has to be serviced. Pension is ridiculously triple locked (more pandering) and so that has to be serviced. Health costs of the demographic time bomb also have to be serviced. So this is only going to get worse. Wealth taxes are starting to come in, but we will see a lot more as it is getting harder to find more working age taxes to load on.

So good luck everyone, you think you have it bad, pity your children !!

I completely agree. People do constantly act as if they had it harder in their day, particularly boomers and even older. My father is late 80s and very well off but has no idea how much things cost or the stress of working parents these days. I think the press and society definitely have a the young have got it easy these days attitude based on no evidence. I don’t think having Covid and schools and work disrupted for years for young people and parents makes it easy and don’t even get me started on the cost of childcare or the cost of houses..!

He would have no life.

YABU. Sorry to say that you both chose career paths that you both know are lower paying despite clearly being intelligent and talented people.
I also put myself through Uni and later a Masters to improve my career and have done pretty well for myself but I also worked in private sector, often with very long hours and a lot of international travel to do my job. I started on very little barely covering my rent out of uni but changed jobs a number of times and moved around and even commuted 4 hours a day to keep my income going up. I will probably have to move to a new country to keep going as the U.K. is not a place to earn without a lot of tax now my salary is higher. Essentially, I’m willing to not be super happy at work, have very long days and move around to improve my families lot. I’m sorry to say that it is necessary to make sacrifices and my work life balance sucks but I will retire sooner than you and hopefully that makes up for it.

I'm 69, and despite being pissed off at having to wait 6 years longer than I expected to get my state pension, I still feel fortunate compared to younger people.

It still wasn't easy though. At one point, when interest rates were well into the teens, I was doing 3 jobs in order to be able to pay my mortgage.

Bang on, this is such a good point and I’m stealing this the next time I have this debate 🤣

The boomers were a huge demographic and have always voted en masse - for their own interests. And of course the politicians will pander to the biggest demographic. Politicians mostly care about getting elected.

Actually I agree with you @MoMhathair
I was just trying to highlight what the OP poster said was the point of her thread.

Op...will you be eligible for promotion with the PhD, over the next few years? I'm not in the UK, but anyone without a PhD just doesn't get promotion...with one it usually takes a couple of attempts to move up.
We have lived in houses with crumbling walls...plastering is a super power! Maybe encourage a plastering course ...

You are correct. Wages have outpaced general inflation over the past 30 years, but they have not outpaced housing costs, it’s that simple.

And the reason housing costs have soared is simply supply and demand. The demand for housing (more people, more people living in single households) is outpacing supply. Just for the record, the number of people arriving on boats is a rounding error. It’s legal immigration and people living longer, divorcing, etc.

Finally all the people that say your husband should just earn more, other than being incredibly patronising, should perhaps consider that he’s doing a job he enjoys and wants to do. The point is that 30-50 years ago, people with jobs like these didn’t struggle in the same way as they do now and didn’t need to maximise their earnings, which if everybody did there wouldn’t be any nurses, etc.

Again all down to housing costs. To which the only solution is to reduce the population (which is why the assisted suicide bill is going through Parliament) and/ or build more houses (which is why successive governments are attacking the NIMBY lobby).

I was born 1965 so right on the cusp of boomers and genx

I remember being hit by the 15% interest rates often quoted by those who didn't experience it.
Fresh out of uni in my first professional job my take home pay was £520/month, mortgage payment on a very basic 2 up 2 down damp Victorian terrace was £510/month.
Two years after buying at the height of the property boom in 1988 our house was worth 10% less than we paid for it on a 95% mortgage, so significant negative equity. We had to get our heads down and save the difference before we could move. Having said that prices had dropped everywhere so once the negative equity was repaid we could start to move up the property ladder. For most of the term of our mortgage we were paying 6-10% interest.

What has changed significantly is lifestyle expectations. We were expected to leave uni at 21/22, get a job straight away and start working our way up the career ladder.

When I look at later generations they spend longer in education and take time deciding on a career path ( not a bad thing). Couples settle down later, rent for longer and maybe decide on buying property later.

I had a mortgage by 23, and 8 years to climb the career ladder and get on the property ladder before having my first child at 31. My children are horrified at the notion of settling down with one partner for life at 22. They are late 20's and still not decided on a career path and are trying out various jobs before deciding what they want to do long term. If delaying entry into a career and buying property until late twenties there will inevitably be fewer years to save and get on an even keel before starting a family. It's the double whamy of a high mortgage and childcare costs that are causing so much financial stress for young families at the moment. I look at what my work colleagues are paying out each month and it's crippling for a few years.

Now at almost 60 I can think of travelling and enjoying the benefits of a frugal youth.
I have had the benefit of no student debt which I will be forever grateful for.

It's not possible to compare the experiences of one generation with another as the external and societal factors are so different. Each generation has faced ups and downs financially.
We couldn't take cheap flights as that sector simply didn't exist, neither did the internet, computers, smartphones, streaming services or cafe culture. If these things had existed then we would have aspired to them like everyone else. I am not going to judge anyone on their choices but you can't spend your money on what hasn't been invented yet. My parents didn't have a car, dishwasher, package holidays or a tv when first married, but neither did any of their peers. No one would expect anyone to go back to living like their grandparents as we have moved on, lifestyles and expectations have improved immeasurable and comparing the expectations and aspirations of one generation and another is unrealistic.

I think you are correct, that it is much harder now. I come from a working class background, council house etc. I now have a property worth seven figures, no worries about a pension pot…..I graduated in 2001, bought a flat in London in 2006, did not have parental support, loans etc. I went into a City job though - so the income was/is high. The stress is also very high as well - but I don’t think someone from my background could do what I did, given student loans, CoL and property prices. There is no way I would be able to buy the properly I live in now, even if I could afford the ‘first property’ as the jump is too much, eg I sold the first flat I had for 365 and bought the current one for 570, now it would be 500 k and £1.1/2 million - just not possible at all…..well without either a massive mortgage/ lump sum…….

You are not being unreasonable and unfortunately have been listening to the wrong people. When the majority of Boomers were your age the words pensions, retirement , struggle were barely mentioned. I feel desperately sorry for families like yours who are working their socks off and can see no end or improvement. Whilst I can see your genuine problem can I say please don't lose sight of your and your child's young life. Life is short and truly not promised.

I'm left wing but the OP and DH combined have a living wage. They have a 3-bed home, which is what I'd consider means above living wage. She's complaining not because she's starving but because her and DH income is lower than a lot of their educated peers, I imagine.

I’m a Gen X and my DH is Boomer, we have 3 Dc, never had much money, lived in our house since having our first DS , never had any spare money to do it up. Obviously its our choice to have children.
I worked FT in an office job prior to having children, DS works as an engineer, since having children I’ve retrained to work in early years, definitely low paid but term time.
Holidays when DC were young were 4 days in John Fowler sites, happy times tho.
Our DS’s are now in their 20’s, one working and one studying, DD is still at school.
Life is extremely hard for this generation of families, soo much expense, the bills keep going up, its scary.
I deal with it day by day, I dont focus on the big wide world, i keep my world very small, coping mechanism probably.

This sounds similar to my 70s childhood. Then mum got pregnant with my sister in the tail end of the 70s and had to leave her relatively well paid teaching job as maternity leave was not given to her as an option. Then dad got made redundant thanks to Maggie Thatcher and her dismantling of the North. Things were hand to mouth for a long time. No cars or holidays.
But- they had their own house. Would be impossible today. It’s so hard for the later generations to be homeowners on ordinary jobs.

You are absolutely right OP. A few MAJOR differences between boomers and all others.

• economic growth significantly increased GDP per head in UK during their working lives. Last 20 years it’s been virtually non existent and remains so which is a major issue.
• percentage of population over 60 and retired. Current workers have to contribute towards the pension costs of a much number of OAPs than previous generations.
• idiotic final salary pensions: current OAP private pension payments are final salary based on virtually nothing like the contribution they put in or that’s needed to be self funding. No generation before or after will ever benefit from that. (Unless you are teacher etc and that needs tackling adap)
• discovery of North Sea oil. Every other country which discovered oil invested a significant percentage into a sovereign wealth fund for the future of the country. Our boomers said sod that and spent it on themselves. (As an example Norway invested a high percentage and currently has a sovereign fund worth $1.7 trillion! That $300,000 per inhabitant in Norway!
• nhs costs: same higher ratio of pensioners vs workers causes major issues here. Lifespan, and the cost of that, puts a huge economic burden on tax payers.
• house prices: the earnings vs house price / house rental ratio has risen so much that a much higher proportion of wealth is needed to cover housing.
• costs of economic inactivity: particularly things like disability benefit and welfare payments in general (because wages are not keeping up due to lack of growth in economy) are so much higher as a percent.
• economic growth would help so much in this country. Labour were right to identify that as a priority but sadly they’ve completely messed that up already.

Incredibly cheap debt has been a significant factor in the rising cost of housing

You're quite right, @Bleachbum, and the flipside of near-zero investment rates also drove the increase in the much hated BTL landlords, because it was one of the few ways they could still get a return on their money

The return to more normal rates (I believe the historical average is four point something?) was well overdue, and frankly the years of engineered cheap debt was the economics of the madhouse

"I hear people say...", "I don't like the rhetoric..." (though I'm not blaming previous generations...), "I'm sick of hearing the idea that older generations didn't have it easier than younger..."
For someone with a PhD, you are remarkably full of sweeping generalisations and suppositions, rather than supporting your claims with evidence and/or some degree of broad understanding. Who are these people making such claims? Where do you do your research or glean the information upon which you make your assertions?

As a member of the hated and despised "Boomer generation", I can assure you that among my many, many friends, relatives and colleagues, there is not one single person who does not feel extreme anxiety about the future of their chidren and grandchildren. Not one. They see the inequity of student loans and the high cost of living which are enormous burdens facing the young, and they despair. The thing is, most of us are trying to preserve our own savings and property (yes, even that purchased while interest rates were 15%, and we had to live off coins from the back of the sofa and selling precious possessions to make a happy Christmas for the DC).

I would love to travel and do the research I need for my latest book, but how can I be so self-indulgent when my children, in their 40 and professionals, are struggling? My book probably will not be written. Our desire is to pass on what assets we have, gained by working till the age of 70, living frugally, growing our fruit and vegetables, driving a 20-year old car, and from inheritance, in a trust, invested wisely to provide a retirement income, money to give the DC and DGC as they need it, for housing etc. They will inherit a nice little sum, but as I've always said to them it's not "jam today AND jam tomorrow"...

Our generation, born just after the war, was indeed brought up to be frugal. We learned make-do-and-mend, walked everywhere, camping holidays, growing our own food and cooking from scratch, everyone wore handmedowns or sewed and knitted, we had no TV or phone. That was our expectation. So yes, we did do without, learned the value of money, hard work and self-reliance. Yes, we were the golden generation, and I am extremely aware of our good fortune. Ultimately, however, the money goes on down the generations, albeit much later than in previous years. I didn't inherit until I was 70. Such is life.

If your DH has social anxiety yet is thriving in his current role and is also a help around the house, you both love your jobs, I assume your DC is happy and loved...then I would focus more on gratitude for what you have considering your circumstances. You have more than most people on this planet have ever enjoyed and it's rare for someone like your DH to find his niche, so I agree with you that that may be enough.

If you want to take on a cause of injustices - and there are a lot of them in this world - pick one where people's lives are truly difficult. I think a change in perspective will help you.

Part of the challenge is that older generations have lived through their generational traumas and come out the other side whereas younger generations are living it now and maybe can't see an end. I'm a child of the 70's and 80's and I remember my parents struggling with inflation and spiraling interest in the mid-70s (they lost money on a house sale at one point), the winter of discontent, having to sell jewellery to pay for a winter school coat for my brother and I, the thatcher recession of the early 80's and later recession in the early 90's when my Dad lost his job and everything was very hand to mouth. This was against the backdrop of the troubles in Northern Ireland and the Cold War. At the time these seemed pretty insurmountable problems, but they are in the past and my parents have a quite comfortable retirement now, but I don't think they were any less worried than current generations.

and be passed on to our child through inheritance

Not necessarily. It could have to pay for any care you might need in old age.

And the reason housing costs have soared is simply supply and demand

Well not only supply and demand -
Inflation and interest rates play their part
1979
Inflation was 25% yes that's not a typo and interest rates soared under Thatcher.
House prices crashed

As Inflation dropped and interest rates went down, more people bought leading to the 1980s boom followed by the 1992 Black Wednesday crash when Major withdrew the pound from ERM.

Then a property boom until 2008 when world markets crashed.

Since then house prices have risen steadily
My theory is RTB removed the secure tenancies and private renting became the norm.
Quantative easing by the Tory gov kicked the post 2008 financial misery can down the road to now.
2008-2022 wahoo! Cheap money for all-interest rates so.low.
Cheap mortgages led to unprecedented levels of housebuyers, Covid restrictions and the Suez canal blockage meant materials were in short supply and there was a bottle neck of buyers.
House prices soared and people couldn't buy a house there were so many buyers .
Gov schemes like HTB and freezing stamp duty caused a stampede.

2022 interest rates rise and here we are