Did the over-45s ruin life for the rest of us?

[goldenticket]

Interesting article - it's certainly been my and DH's experience in the workplace (withdrawal of perks, pensions, travel arrangements etc etc). Wondered what anyone else thought?

I'm old enough to have had an almost free university education - so I earned a lot, paid a lot in taxes and spent some on a house. I also invested so I can look forward to an adequate income in retirement. BUT I worked very hard and I never wasted vast sums of money the way young people do now. When we bought our first home we could only afford a bed, a cooker and something to sit on. We saved up the deposit by not going out much, not buying new clothes and so on. Our parents didn't help. But we didn't run up massive debts enjoying ourselves then whine we had no money. Other people did and didn't buy the house, that was their choice.

Now everyone expects to go to university so the money is spread more thinly. They expect to have lots of material possessions without working for them, to have a car the moment they turn 17, to spend a fortune on weddings, to get a deposit for a house without cutting back on their spending. My children are told quite bluntly that I worked for what I have and I expect them to do the same.

The baby boomers have certainly done very well regarding pensions and property but they also suffered some hard times too.

The 1970's sound crap with 3 day week, electricity shortages and rampant inflation.

The 1980's had horrific unemployment. My parents were caught up in that and it wasn't much fun.

They didn't buy there first home until they were 38 and the lending conditions were very strict. The bank would not take my mums wages into consideration at all.

However, I think baby boomers had a lot less fun than young people today. We have an image of the 1960's being all about free love and LSD trips but the reality is that most children left school at 16 and got a crap job. They did not fart around for 3 yrs at uni - only 5% were lucky enough. They lived with their parents until they got married.

Actually, I blame the political system for this mess. It has been obvious from about 1980 that when the baby boomers were old enough to retire that the population would not be big enough to support them. National Insurance is one big Ponzi scheme. There was no politician brave enough to raise the retirement age and now it is too late.

Granny23, thank you for your posts - really interesting.
Even in my lifetime (I am 38) people have changed a lot in what they expect - people in their 20s surprise me with what they take for granted in terms of day-to-day living - even down to buying lunch every day at work. I find myself thinking: I know what you earn, how can you think it is worth spending over a fiver on a sandwich and a smoothie in a fancy paper bag? Has anyone ever told you can just buy bread and cheese and apples?
But then I think: if you save £20 a week on lunch, dutifully packing up your scraggy leftovers 52 weeks a year, then at the end of it you will have about £1k. Well done! So - only another 20 years and you will have a deposit for a small noisy property in a rough area with bad transport links. Then I realise that I am the idiot because I have been eating packed lunches for years, never buy clothes, and still rent and probably always will.

I have a graph somewhere going back to 1930 which shows that for most of the last 80 years house prices were at 3 -3.5 x the avergae man's salary. It is only the last 10 years and the few years immediatley after the WWII (due to physical destruction of house sby bombs) that house prices reached 6 x male salaries. Fundmentally, this whole thing hangs on house prices.

If house prices were to halve overnight they would fall back to the old 3.25 x average male wages. Young peope would be able to buy houses but many middle aged would be destitute as many still have huge mortgage debt. Older peole would no longer be able to borrow against their house (or sell it) to top up their pension. The banking system would collapse as mortgege debt exceed teh asset value and consumers stopped spending. That is why Govt has no intention of letting house prices fall. Indeed for the last 40 years every Govt of every colour has done everything they can to maintain house prices. The same thing has happened in the USA - and is on the brink of ruining their economy.

The entire financial system depends on house prices. Make no mistake about it, the last 3 years of Govt stimulus and rescuing the banking system has been about preventing property prices falling too much. However, that policy militates againt a fair society and is the main cause of the intergenerational tension between 'boomers' and younger people.

I would say that it is over 65s (like my parents) that are the real beneficiaries of this though. They are the ones sitting in family houses they no longer need but that they bought in the 1970s and then watched inflation eat away their mortgage debts. The people age 40 - 50 are my friends with huge mortgages. The 25 - 40 age group have little chance of ever buying a family house.

It's true that we won't have the pensions and long, affluent retirement that the baby boomers are having / about to have, but then neither did any generation before them, so you could look on it as a 'blip'. There are however some great things our DCs will have, like the minimum wage.

"Actually, I blame the political system for this mess. It has been obvious from about 1980 that when the baby boomers were old enough to retire that the population would not be big enough to support them."

As I've said above it was obvious long before 1980.

The birth rate headed down hill about 20 years before that.

And it was 10 years before 1980 that the rate had slumped to such an extent that there were less young people than old.

I'm 46. I have worked all my life, taking just a few months off for each baby (I work freelance from home). I am a volunteer for three organisations in my spare time.

How have I ruined your life?

Oh, and I have contributed to my own personal pension plan for the last 14 years, even when finding the money was tight. I estimate I will be able to afford retirement when I am about 70.

The birth rate is a red herring. Our birth rate is booming at the moment, according to the latest figures. And Ponzi demographics never resolve a pensions deficit--it just means subsequent generations have to fund even more pensions.

It is better to extend the retirement age.

I am just under your limit - am 45 now so I think I am OK

But tend to agree with this:

"I sometimes wonder if today's students are tough enough to cope with real life; we didn't consume all the cars and clothes that they have now" God yes! I knew no-one at university with a car or a house - that isn't unusual now.

"The 25 - 40 age group have little chance of ever buying a family house."

That's not true for the tail end of that age group. I fall in there and so do most of my friends and family and most of them own a family home.

However you're totally right as you start heading towards the younger end of that age range.

"Make no mistake about it, the last 3 years of Govt stimulus and rescuing the banking system has been about preventing property prices falling too much. However, that policy militates againt a fair society and is the main cause of the intergenerational tension between 'boomers' and younger people."

What exactly do you propose they do about house prices?

People will not want to sell their homes once they drop significantly below the price that they paid for them unless they're forced to.

Once negative equity sets in people will just sit tight. So if for some reason house prices did drop there would be less homes on the market as the negative equity people stop selling, and that reduction in supply will slow and then stop the price drop.

It's no good sitting there saying "that house should be worth half as much as it is!" because the owner will just reply "well I paid more than that for it and I won't sell it at that price."

The best bet is that prices will just stagnate and that inflation will gradually cause a relative drop in house prices.

So again I ask what exactly do you want to happen?

'We accepted living within our means and make do and mend. I know this is a huge generalisation.'

Yes, it is. Because your generation made that very, very difficult for future generations.

The cost of everything has skyrocketed in relation to wages.

Property, in particular, which translates into basic living costs even if you rent.

And now they al expect to spend 30+ years on the current taxpayer playing golf whilst we all know we will get jack shit and yes, we're paying into the system all these years, too.

Well, I'll be damned if I'm going to pay more for them when I'm eating beans and drinking water and will die in poverty!

I see nothing wrong with raising the retirement age to 70 NOW.

The system was set up so you lived about 5 years after finishing work, not 30 or so expecting to take off on cruises just because you're old and paid into the system.

So what? We all do! The money we put in now is worth the same as what was put in 40 years ago.

'I would say that it is over 65s (like my parents) that are the real beneficiaries of this though. They are the ones sitting in family houses they no longer need but that they bought in the 1970s and then watched inflation eat away their mortgage debts.'

exactly! and the very same ones who rabbit on and on about 'well, young people today just want it all right now,' and other tripe like that.

I think once the Baby boomers start dieing (15 yrs time?) then house prices will start to taper off. Surely there will be a glut of family homes on the market.

When pensions were introduced most people were expected to claim for a couple of years at most. Now, if a women retires at 60 (this is being phased out) then she could hope to spend 2 decades being retired. It is a completely unsustainable system and this should have been tackled decades ago.

All this consolidates social inequality for generations though.

Stockbroker belt parents will be able to ensure their children leave university debt free and help them onto the property ladder.

Even households on above average incomes are unlikely to be able to afford to do this for their children

So inequality becomes entrenched for generations

Unfair IMO

"The birth rate is a red herring. Our birth rate is booming at the moment, according to the latest figures."

No it's not, look here:
www.statistics.gov.uk/census2001/pyramids/pages/UK.asp

It starts off as a nice pyramid with each generation being "supported" by a more numerous generation below it.

And that was the plan for how the pension system would work.

And then look at the bottom of that diagram, it starts to shrink. Each smaller younger generation is going to have to support a larger older generation about it.

As said we have less people aged 16 and under than we do over 65, and the 65+'s are not the most numerous generation so it's going to get worse.

"I think once the Baby boomers start dieing (15 yrs time?) then house prices will start to taper off. Surely there will be a glut of family homes on the market. "

Sales of properties such as that will help stagnation of the market but many other people will be either unable or unwilling to sell at a loss so they won't sell their homes. So the potential "glut" of properties will be reduced.

My fingers are crossed for stagnation and a steady correction of the prices over time.

Sorry Ruby, you are a very young baby boomer, I was thinking about the ones born immediately after WWII.

As someone else said it was a complete blip before my parents time - they are in their late 60's only the true middle and upper classes inherited the rest of us worked hard and died penniless. So even if you are a graduate or have post graduate qualifications it doesn't make you true middle class IYSWIM.

At nearly 38 I am just so grateful we our mortgaged to the hilt to have a shoebox property rather than the insecurity of renting.

'I knew no-one at university with a car or a house - that isn't unusual now. '

I worked at Edinburgh University, where it was common . . . for the baby boomer parents to buy the students a flat and a car.

The poorer ones were just like they always have been, working and living at home or with tons of students in some flat and no car.

ABD is right unfortunately. So much of this comes down to house prices. My parents bought our family house for £60k in 1983. They sold in 2007 for 7x that. No-one in our generation is going to see that sort of capital appreciation.

Given that we now have a major affordability issue, even with interest rates close to 0%, probably what will happen to house prices(IMO) is either:

1. Inflation or sovereign debt crisis forces interest rates to rise, wave of repossessions, house prices fall, or

1. As older people die off, more properties become available, prices fall but over a longer period and in a more controlled manner.

Also, dont forget that everyone in the private sector is paying tax to pay for the final salary pension schemes in a bloated public sector. Meanwhile most people in the provate sector have pitiful pensions and one of the biggest incentives (40% tax relief) was taken away by the government at the last election. That isn't just old people's fault. We get the government we vote for.

sorry- taken away at the last budget, not election.