Podcast Summary
Intergenerational Financial Divide Widens for 1980s Birth Cohort: Those born in the 1980s are around £800 worse off per year than those born in the 1970s due to rising property prices and stagnant wages, according to a report by the Office for National Statistics. The divide could widen further due to technological disruption and ecological challenges.
The intergenerational financial divide, long thought to be a thing of the past with each generation expecting to have a better standard of living than the last, is now a reality for those born in the 1980s. According to a report by the Office for National Statistics, those in their 30s are around £800 worse off per year than those born in the 1970s. This divide is largely due to factors such as rising property prices and stagnant wages. The report follows a recommendation from the House of Lords Committee to publish this information and let people know how they compare to previous generations. The trend could continue due to technological disruption and ecological meltdown, making it harder for younger generations to maintain the same standard of living as their predecessors.
Impact of Economic Landscape on Different Age Groups: The economic crisis in 2008 disproportionately affected those born in the 1980s, causing a 'lost decade' of poor productivity and wage growth, while the youngest generation may have been less affected.
The economic landscape has significantly impacted different age groups in various ways over the past few decades. The ONS report reveals that while earnings were expected to increase the most during the twenties, the financial crisis in 2008 led to a "lost decade" of poor productivity and wage growth. This affected those born in the 1980s the most, as they were hit hardest at the point when they were supposed to be earning the most. However, the youngest generation, which includes those who started secondary school around 2000, may have been less affected due to being sheltered from the crisis. The report also raises questions about blame and policy decisions regarding intergenerational wealth and income disparities. Overall, the report provides valuable insights into the economic experiences of different age groups and can inform future policy decisions.
Income growth disparity for individuals born in the 1980s: Individuals born in the 1980s have seen less income growth than previous generations, potentially impacting their disposable income and long-term financial stability. Career breaks and life events can further influence income trajectories.
Individuals born in the 1980s have experienced significantly less income growth compared to previous generations, leading to a notable discrepancy in disposable income. This trend, attributed to the financial crisis, puts pressure on this generation and could have long-term implications. The research also highlights that wage growth during the twenties is often the largest increase, but career breaks, gap years, and other life events can significantly impact income trajectories. While the research may inform policy decisions, it doesn't necessarily provide a clear solution or justification for specific policies, such as removing benefits for older individuals. The findings add to the ongoing conversation about income inequality and its impact on individuals and the economy.
Older generations and intergenerational conflict: Older people feel saddened by intergenerational conflict, believe they should help younger relatives, and think young people have better opportunities than they had. Circumstances and location matter, and promoting understanding and support between generations is essential.
The current economic situation and the role of older generations in society has been a topic of debate, with some criticism towards the elderly for supposedly enjoying disproportionate financial advantages. However, a recent study by Saga revealed that most older people feel saddened by intergenerational conflict and do not feel they have control over economic factors that have contributed to their financial situation. Older and younger generations are not at war, and older people believe they should help younger relatives if they can. The study also showed that a significant number of older people think young people have better opportunities than they had in their day. It's important to remember that circumstances and location play a significant role in financial situations, and it's crucial to avoid pitting people against each other based on stereotypes and misconceptions. We're all fortunate to live in a prosperous country, and it's essential to promote understanding and support between generations.
House price growth varies across the country and pension policies have broader implications: Despite significant house price growth in some areas, pension policies can impact spending on other services and have broader implications for different generations and income levels.
While house price growth has been significant in some areas, it's important to remember that not all parts of the country have experienced the same level of growth. Furthermore, government policies, such as the triple lock on pensions, which guarantee pension increases based on inflation, wage growth, or 2.5%, can have implications for other areas of spending, like benefits for working families. Older generations, particularly those with comfortable retirements, may not see the need to pay for certain services like the TV license, leading to debates about means testing. Ultimately, the conversation around retirement age and pension policies is complex, and it's essential to consider the broader implications of these policies on different generations and income levels. The controversy surrounding the proposed retirement age increase to 75, which was not an official government suggestion, highlights the importance of accurate reporting and clear communication around policy changes.
Debate over Raising UK State Pension Age: Proposed pension age increase to 70 by 2028 and 75 by 2035 could leave retirees with little retirement time, potentially leading to means-tested state pensions and economic uncertainty.
There is ongoing debate about raising the state pension age in the UK, with suggestions from a right-wing think tank for it to reach 70 by 2028 and 75 by 2035. This would mean people could have as little as 6 years to enjoy their pension after retirement, given the current average life expectancy. The potential increase in retirement age has raised concerns about the uncertainty of retirement planning and the potential for means-tested state pensions. The idea of a means-tested state pension is particularly worrying for many, as they have come to rely on it as a part of their retirement planning. While some argue that extending working life could boost the economy, others find the prospect of waiting to retire until mid-seventies challenging, especially considering the current trend of increasing retirement ages. The potential impact on jobs, particularly those requiring physical labor, is also a concern. Overall, the uncertainty surrounding state pensions and retirement ages adds to the anxiety many people feel about their financial future in old age.
Focus on personal retirement savings, not just state pension: Individuals should save for retirement beyond state pension, diversify investments, and consider intergenerational pressures.
Individuals should focus on their personal retirement savings and not solely rely on the state pension, as its future is uncertain. Diversifying investments and saving as much as possible into pensions can lead to a more comfortable retirement. However, there is also a growing issue of intergenerational pressures, with many parents providing financial support to their children and grandchildren, which can negatively impact their own retirement savings and standard of living. It is estimated that £6.3 billion was lent to children and grandchildren from the Bank of Mom and Dad in 2019, and this trend is putting a significant strain on retirees. It's important for individuals to consider their retirement planning carefully and save as much as they can, while also being mindful of the potential impact on future generations.
Family finances and home buying pressure: Older generations face pressure to help children buy homes, leading to tension and practical consequences. Savers may be better off with easy access accounts due to slashed interest rates on fixed rate bonds.
Money and family dynamics can create significant stress and financial strain, particularly when it comes to home buying and inheritance. Older generations, often in their sixties and seventies, may feel pressure to help their children buy homes as house prices rise, leading to tension and practical consequences. Additionally, older people are perceived to have an unfair share of wealth compared to the younger generation in a recent poll. On the other hand, savers may be better off opting for easy access accounts instead of locking away their cash in longer-term deals due to slashed interest rates on fixed rate bonds. Overall, it's essential to consider the impact of family finances and market trends on personal savings and home buying decisions.
Currently, it's not financially beneficial to lock cash away for more than a year due to low swap rates and competitive mortgage market: Despite low mortgage rates, it's not financially wise to lock cash away for over a year in fixed rate products due to lower swap rates for longer terms. Easy access savings can be a better option for quick access funds.
Due to the sensitive relationship between fixed rate products and swap rates, which are currently lower for 5-year swaps than 2-year ones, it's not financially worthwhile to lock your cash away for longer than a year at the moment. The competitive mortgage market and rock-bottom mortgage rates are contributing factors to this situation. Easy access savings, on the other hand, can be a good option for those who need quick access to their funds. Marcus Bank, in particular, has propped up the easy access savings market with a stable rate. It's important to note that most banks and building societies bring in savings to lend out, and with mortgage rates being incredibly low, there's little incentive for savings rates to increase. However, if you want to boost your savings rate, consider opening an easy access account with Marcus. It may not be a bonus in the traditional sense, but it can help you earn a slightly higher return on your savings.
Renew Marcus savings account bonus rate: Customers can easily renew Marcus savings account bonus rate of 1.5% at any time for an additional 0.15% earning
When opening a Marcus savings account, customers can renew the bonus rate of 1.5% after the initial 12-month period by clicking a button within their account. This process is simple and can be done at any time, not just before the initial rate expires. Marcus offers this renewable bonus rate to treat both new and existing customers equally, allowing them to earn an extra 0.15% on their savings. While some may argue that Marcus could just keep the rate at 1.5% instead, the bank is likely hoping that a portion of customers will not renew their rates, allowing them to maintain their position at the top of the savings market. Renewing the bonus rate takes only a few minutes and can result in additional earnings for savers, making it a worthwhile action for those with a Marcus account.
Metal bank cards: A status symbol in the digital age: Metal bank cards, made of titanium or other metals, are a status symbol for the social media generation despite their premium price and limited practical uses.
Metal bank cards have gained popularity as a status symbol among consumers, with Monzo, Revolut, and Apple leading the trend. The cards, often made of titanium or other metals, are more expensive than traditional cards and come with additional fees. However, the primary appeal seems to be the aesthetic value and the clink sound they make when used for contactless payments. Despite their premium price and limited practical uses, such as being difficult to use with ATMs or carrying around in wallets, the social media generation values them as a status symbol. Apple, for instance, launched its titanium card in the US, but encourages users to use Apple Pay instead, minimizing the need to physically carry the card. Monzo and Revolut also offer metal cards at a premium, but have faced backlash over the fees. The trend towards metal cards highlights the growing importance of aesthetics and social status in the digital banking landscape.
The Desire for Exclusivity Leads to Premium Pricing for Metal Credit Cards: People pay high prices for metal credit cards, granting access to exclusive events and membership, demonstrating the desire for status symbols and exclusivity
The desire for exclusivity and status symbols, as demonstrated in the Fyre Festival documentary, can lead people to pay premium prices for seemingly unnecessary items, such as metal credit cards. Billy McFarland's company, Magnesis, capitalized on this trend by offering a metal card for $250 a year, granting members access to exclusive events and membership. Although some may view this as pretentious, the demand for such cards remains high, with Monzo's upcoming launch expected to cause a frenzy. It's important to remember that people have different priorities and values, and if a metal card brings joy or perceived value to someone, then it's a personal choice. For those interested in the latest money news, visit thisismoney.co.uk or download the app. If you have a metal card or a story to share, email editor@thisismoney.dot.co.uk or leave a comment on the podcast story. Don't forget to follow us on Twitter and rate and review our podcast on iTunes.
