Are the baby boomers to blame for Britain's financial mess?
NO HUMBUG! BOOMERS HAD IT JUST AS TOUGH - BY LUCIAN CAMP
The generation that followed mine is known as Generation X. I can imagine two possible reasons why: one, some of what my baby-boomer generation has to say about them is unfit for anyone aged below 18 to hear, or two, the spoilt brats owe us a great big kiss of gratitude.
For boomers like me (officially those born between 1946 and 1964), there were times when it all seemed to be going so well. We were in our prime in the 1960s, and, as far as we can remember anyway, it was a blast.
When we look wincingly back on the 1980s, we can't deny it was fun in its bizarrely shoulder-padded way. A few of us are just about managing to saddle up and ride off into the sunset with nice, fat index-linked final salary pensions before such things become the subject of myth and legend, like Camelot and unicorns.
But for most of us, boomerdom has become a tale of broken promises and unmet expectations - and in one final indignity a bunch of rapacious Gen Xers (born between 1965 and 1981) are waiting to rummage greedily through our pockets as soon as we are too weak to resist.
You see, it was actually the previous lot - that unnamed generation born between, say, the late 1920s and the mid 1940s – who really took advantage of the twin peaks of the post-war economy: a 30-plus-year bull run in stock and property markets, and a benign social climate in which the state and large employers showered benefits on them.
If you were born in, say, 1940 and retired in 2005, you enjoyed both in full measure.
My lot wasn't and didn't. Born in 1953, I calibrated my expectations against the previous generation – only to see the cup dashed from my lips. Final-salary pensions disappeared from my private sector world some years back. The FTSE has now failed to outperform cash savings over 20 years. Super-growth in the housing market is a distant memory.
While we've been caught out by unexpected events, Gen Xers have no such excuse. They could see the way things were going, but didn't care. They were determined to enjoy the good life, even when they knew they couldn't afford it.
These days, we boomers are burning through our money fast. Our lifestyle costs have been accelerating almost as quickly as our resources have been shrinking.
So don't expect too much from us - the cup of prosperity has been dashed from our lips . You guys have been able to see the way things are going for most of your adult lives. If you've chosen to ignore the warning signs and mortgage your future for that Range Rover and those Bedales fees, don't come to me for a bailout.
Lucian Camp is owner of Lucian Camp Consulting
YES BABY BOOMERS - J'ACCUSE - BY RACHEL LACEY
Baby boomers don't know how lucky they are. From where I'm standing, they've enjoyed a truly great Britain. They grew up in a nation that valued young people and supported them with everything from free milk to grants to see them through free university courses. Thanks to a largely strong economy over their working lives, many are now reaping the benefits of a 40-year housing boom and generous final-salary pensions.
The Britain my children were born into doesn't feel nearly so great. The stratospheric house price growth that underpins much of the boomers' wealth means the average house deposit has risen tenfold from £6,600 in 1990 to £66,000 in 2010, according to First Direct. It's hardly surprising then that the typical first-time buyer is now 38, according to Post Office Mortgages. Who knows where prices will be when my two are old enough to buy?
I would love my children to go to university. But with universities poised to charge fees of £9,000 a year and the student grant now a quaint 20th century relic like the hula hoop, I am beginning to wonder if a university education is really worth racking up so much debt for, especially when more than a quarter of graduates remain unemployed three years after graduation.
I'm not naïve enough to think retiring in the current climate is going to be a breeze, but I reckon it's going to become even harder for future generations.
Even though the amount of tax I pay is rising, what I'm likely to get back in retirement is falling – and that retirement is an evermore distant reality as the boomers go on sucking the financial life out of the working population. I have no idea just how long I'll have to work or what changes – almost certainly reductions – will have been made to the state pension in that time. I'm pretty sure I won't be getting a free bus pass or winter fuel allowance.
Putting it bluntly, the boomers are going to cost us. Older people are expensive and younger generations will have to work longer and pay more tax to fund boomers' pensions and care. That means not only my husband and I but my infant children too – someone retiring at 65 now on a fat index-linked final salary pension will be just 83 when my youngest begins work. Put like that, is it really so bad to ask people to pay for their care, even if it means selling their homes?
Families are picking up the tab for years of generosity to the boomers. Don't get me wrong, poor pensioners should always be supported, but should the government really be helping wealthy retirees pay their heating bills?
At the rate we're going, the baby boom is going to be followed by the baby bust.
Rachel Lacey is group personal finance editor of Moneywise.
All investment returns are measured against a benchmark to represent “the market” and an investment that performs better than the benchmark is said to have outperformed the market. An active managed fund will seek to outperform a relevant index through superior selection of investments (unlike a tracker fund which can never outperform the market). Outperform is also an investment analyst’s recommendation, meaning that a specific share is expected to perform better than its peers in the market.
Final salary pension
A defined benefit pension scheme is one where the payout is based on contributions made and the length of service of the employee. A typical scheme would offer to pay one-60th (0.0168%) of final salary (the one you’re earning when you finally retire) for each year of contributions to the scheme (even though these years were probably paid at a lower salary). Someone retiring on a final salary of £30,000 who had been a member of the scheme for 25 years would receive a pension of 42% of their final salary (£12,300 a year before tax). Sadly, many companies are winding up their final salary schemes or closing them altogether, meaning pension benefits accrued after a certain date (or those available to new employees) may be on a less generous money purchase basis.