Babyboomers versus Generation X – the great financial divide
How true is the belief those born in the 1940s and 1950s enjoy the good life while their children struggle?
Saturday 19 November 2011
The subject of finances has never seemed to divide the generations as much as it does today. There's a perception those born in the 1940s and 1950s have had it very good, while their children will struggle. Backing up the perception is the fact Babyboomers have benefited from a record period of house inflation and appear to be retiring on gold-plated pensions. Meanwhile Generation X can hardly afford to get on the housing ladder and are having to face up to a future of working for longer than ever – to 70 and beyond – in return for much smaller pension pots.
How true is that perception? We spoke to Babyboomers and Generation X savers to find out. As our report shows, the recession may have been something of a leveller when it comes to pensions. But when it comes to property and standards of living, and the decision about when to retire, the generation gap has never seemed so wide.
Who has it better? Babyboomer or Generation X?
Generation X mother Katie Burton, 38, from Elsenham, Essex: "I think my parents had it easier than us. They were in their 20s in the 1960s. Can you imagine being able to leave a job and walk straight into another one, and where houses were affordable in relation to the salaries of that time? It seems that we all work so hard to basically exist without a great quality of life, slogging away to make ends meet. I have the perspective of living in another country – New Zealand – where salary and cost of living were much more in line. We actually had a chance to enjoy the elusive life/work balance. I haven't found that balance since returning to England 10 years ago. Now it seems that the struggle to get on and obtain financial security for the future is growing ever more elusive. It's a great shame, but I for one have become apathetic that it will ever get any better than this, sadly."
Pre-retired Babyboomer Ruth Osborne, 52, from Colchester: "We have two properties, one in the UK and one in Italy but we are having to sell the UK flat, so we are not quite as secure as we had hoped to be by now. Still, we are luckier than most and I guess our children might not even get a state pension when they retire. We have been caught out by the recession. While we were in the process of buying our house in Italy in 2008 the world economy changed tremendously – the pound crashed against the euro but we are OK. It's just our property is worth less than we thought, although we only have a small mortgage on it. We are hoping that even with the economic troubles, being in Italy will improve our quality of life."
A 70-year old Babyboomer from Hereford: "People think Babyboomers have had it easy. And it's true many of us were fortunate to benefit from rising property prices. I bought my first home with my then husband in 1968 and it was just £1,500. We were able to put a £500 deposit on it thanks to our parents. We were able to move up the property ladder and when we divorced we were both able to buy a house each out of the proceeds of our home – I can't imagine people being able to do that now. And we were not wealthy at all. We bought a property in Portugal seven years ago as my husband loves golf. It was £100,000 and it was meant to be part of our pension planning. But it's turned out to be a disaster. The market has just fallen through and there's no way we can sell it. And it's no longer as cheap to live there as it was.
"The biggest financial worry for me is my children. My daughter and son are both married with children, and they are struggling. My son has a good job – he's in IT and my daughter-in-law is a teacher, but we had to help them with a deposit for their first home. My daughter is an accountant and has just had a baby, but her husband has been made redundant and we are having to help them pay bills at the moment. I'm lucky because I did get a pension because I worked for the NHS but I don't see my children are going to have that luxury. I bought a second home, they can't even afford to buy the first one, and their NI payments are being used to fund today's pensioners. We are lucky because we have full state pensions. I think it's unfair that today's younger people are paying national insurance payments that are allowing people to retire at 60/65 when they might not even get a state pension. It's not as if the older generation are the ones who helped us through the war, I think the goodwill of the younger working generation is going to be tested in the years to come."
How the Babyboomer lives: "We don't want to retire"
Ruth Osborne is 52 and lives in Colchester. Until earlier this year she worked as press officer for the NHS. She now works as an English teacher and has moved with her partner, James, 54, to Northern Italy.
I was 20 and it was 1979 when I bought my first home with my boyfriend. The house was £20,500 and I was earning £2,500 a year, 10 times my income. I saved up for a year and managed to put by £1,000 from my salary. We had no choice; you had to have a deposit of 10 per cent to get a mortgage. They didn't do 100 per cent mortgages then, and some women had trouble borrowing if they wanted to buy on their own. Saving up that £1,000 was really hard. I lived with my parents and I didn't have a car, go on holiday or buy clothes or see films. In fact I did very little but work for a whole year. During the year we were saving, 1979, property shot up; we thought we would be able to buy a three-bed semi, but that changed completely and in the end we had to buy a two-bed terrace that needed loads of work. The property ladder has been good to us. I started out with a terraced house in East London, and now have a detached house in Essex and a detached house with land – including an olive grove in Italy.
I have a frozen final-salary pension from the time I worked in local government – around 20 years. It isn't very much though, as I worked part-time while my children were young. We haven't been quite as lucky as some when it comes to our pensions because in 2007 when my partner was 50, his final-salary pension scheme that he had been a member of for 28 years, was closed and frozen. He had to start paying into a new money purchase scheme, with no guarantees. He was expecting to be able to retire by the time he was 60, but that's not going to happen now. In reality we may always do a small amount of work anyway because we would want to. I enjoy my new career and I could still teach a few hours a week.
Bank of Mum and Dad
We have one child who we are supporting at university. We have two other children, aged 22 and 27, who we both helped at university.
They both have good jobs related to the subjects they studied at university and are financially independent, although we may help with housing in future. Both of them have worked their way through university, though, otherwise they would not have been able to afford to study. I think it's likely that we will leave property to our children, but not much in the way of savings. I would say that most of our wealth is in our property, we're not cash rich.
The Generation X mother: "I have given up hope of ever owning a home"
Katie Burton is 38 and lives with her two children, Annie, nine, and Grace, seven, in Elsenham, Essex. She works in the pharmaceutical industry.
We don't own our own home; I guess it's a question of timing. I was living in New Zealand with my husband and when we came back to the UK, property prices had gone through the roof. I earn a good salary, more than the national average, but my current savings wouldn't cover the sort of deposit we need. Property prices round here are too high for what you get.
The worst thing is that when a property does come up for sale, it's sold really quickly and the next thing is a "to let" sign goes up. Renting does have its upsides, such as if the boiler breaks down or there is a leak I can simply make a phone call to the letting agent and they get it fixed at no extra expense to me. However, as the time passes, the need grows ever stronger to have a place that is mine and in the future, my children's. Being able to have the carpet, wallpaper, designs that are my choice, and that this is my space would be absolutely wonderful.
In my last job that was for a FTSE 100 company, we received a basic pension, which we could increase contributions to if we wished.
I also had a pension plan that I took out when I was in my early 20s, but after financial problems and getting into debt at the time, I stopped making contributions. I've just changed job – following redundancy – at the moment a pension is the last thing on my mind. I do have savings and I know I need to sort out a pension. I feel lucky to have a job.
I have a small amount on a credit card, less than £1,000. I'll probably have paid this off in a couple of months. I don't take out credit generally and live within my means.
Bank of Mum and Dad
Both my children have bonds thanks to their great grandmother, and savings. I have never spoken to either parent about whether they have left anything to me, my sister or our children.
My mother doesn't have a lot of money. She lost her home in the early 1990s recession, although she has possessions and would give us her last penny. My father and stepmother have done well out of property but they bought a place in Spain which has lost its value and their pensions are not doing as well as they hoped.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
- 1 Salisbury ranked seventh-best city in the world to visit in Lonely Planet’s Best in Travel 2015
- 2 Disney announces new female-led film Moana
- 3 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 5 Russell Brand threatened with arrest after filming outside Fox News headquarters
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Jose Manuel Barroso warns David Cameron against making 'historic mistake' over immigration reforms
Worst Airports of 2014: Poll names Islamabad airport in Pakistan worst in the world
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village