28th October 2015 at 4:11pm
The news that those who are retired have a larger income on average than those of working age, has been making the headlines.
The so-called ‘baby boomers’ born before 1964 are better off than ever with an income of £394 a week compared to those in work who get just £385 a week.
Buoyed by state support – including the state pension – generous final salary work pensions and with mortgages mostly paid off, it is “a remarkable transformation” in the lives of pensioners, according to new research from the Institute for Fiscal Studies (IFS).
Amazingly, many have a higher income than they did while working – and often with fewer outgoings once any children have flown the nest.
Pensioners’ income is expected to increase
It’s certainly good news for some and is set to continue as pensioners’ income is expected to rise further over the next decade.
They are among the most “financially fortunate in our history” London Mayor Boris Johnson wrote in his Telegraph article ‘Don’t bash the baby-boomers – they have left us fit to face the future’, but it doesn’t have to divide the generations.
Yes, the financial future looks less certain for those born later. The under 50s – and those in their 20s and 30s in particular – won’t be as well off. They’re likely to have less to live on than their parents’ generation and owning a property can seem out of reach.
But the bigger picture is far from gloomy. The older generation may, generally, be better off but having that financial comfort means they’re able to live life to the full. They often act as the Bank of Gran and Grandad supporting their children and grandchildren with expenses such as school or uni fees, help them get a foot onto the first rung of the property ladder and have enough left to pass something on as an inheritance.
Post-work life matters
If you are one of those under 50s, there are challenges to be faced but much to be positive about. Compared to your parents, there’s a higher chance you’ll have gone to university, travelled, your health and longevity are improving and increasing and technology is (probably) making your life better.
Auto-enrolment makes saving for post-work life easier, with matching employer contributions and tax relief top-ups going some way to encouraging more people to take control of their future finances.
And – the real game changer – pension reforms which allow you to access your savings when you reach the age of 55 means you have more choices around how you live your life in your later years.
That is something well worth being positive about.
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The information in this blog or any response to comments should not be regarded as financial advice. A personal pension is an investment and its value can go up or down and may be worth less than you paid in. Laws and tax rules may change in the future. The information here is based on our understanding in October 2015.