Fixing the generational wealth gap “a priority”, as fears grow of loss of state support in retirement


New findings from the International Longevity Centre UK (ILC) and M&G plc have highlighted significant generational disparities in wealth accumulation, raising concerns about intergenerational fairness and the future of the “intergenerational contract”.

A YouGov survey of over 2,000 adults, commissioned by the ILC and M&G, revealed that more than half (55%) of respondents over 25 believe government support for older generations will decrease by the time today’s younger generations reach retirement age.

One finding contradicted the common myth that younger generations are “spendthrift”: faced with a hypothetical £10,000 windfall, there was a strong appetite for savings more generally with almost three quarters (73%) of respondents aged 18 to 24 and half (50%) of those aged 25 to 49 say they would put a portion into savings.

However, less than one in 10 respondents aged 18 to 49 said they would save a portion for retirement (8% for those aged 18 to 24 and 9% for those aged 25 to 49). In comparison, a third (31%) of those aged 50 to 64 would save a portion for retirement.

Wealth increases

Further ILC analysis indicates that older generations have disproportionately benefited from wealth increases in the past decades. From 2010/11 to 2019/20, people aged 55 to 64 saw their wealth increase by 39%, and those aged 65 to 74 experienced a 58% rise. In stark contrast, younger generations aged 35 to 44 saw their wealth grow by a mere 4%.

These findings suggest the urgent need for policy makers and the industry to assess the policies and financial products that are in place to ensure more of us can save for retirement.

The survey also found:

  • Few people believe that wealth in the UK is fairly distributed. This is particularly the case among younger generations, with more than 1 in 2 people under 50 feeling that older generations receive a disproportionate share of wealth (58% of those aged 18 to 24 and 53% of those aged 25 to 49).
  • There is consensus among younger and older generations, with both feeling current government spending on their generation is too low. 71% of those aged 65 and over feel the government is currently spending too little on their generation, while 65% of people aged 18 to 24 felt government spending on their generation was too low.
  • Younger people are also more likely to want to invest in stocks and shares: with 18- to 24-year-olds three times more likely to say they would invest part of a hypothetical windfall than people aged 50 and older (27% versus 9% for people aged 50 to 64).
  • And more than half of respondents (51%) aged 18 to 24 said they would put a portion towards housing, such as saving for a deposit, paying rent or mortgage, compared to just 5% aged 65 and over.

Dr Vivien Burrows, Senior Research Fellow at the ILC said, “The generational wealth gap must be addressed – and quickly – to make sure there’s equitable financial opportunities for future generations. We need long-term policies that take the concerns and circumstances of different cohorts seriously, and don’t just pit generations against one another.

“We must tap into what motivates practical savings and investment behaviours and ensure that all people benefit from financial security across our longer lives.”

Clive Bolton, CEO Life Insurance at M&G said: “These findings show that the savings culture is far from broken, busting the myth that younger generations are spenders and not savers. Through necessity rather than choice, younger people are focusing on near-term priorities which will in turn result in different retirement needs.

“Policymakers, companies and wider society will adapt their thinking as the intergenerational contract resets to keep pace with changing societal and economic trends. By creating innovative savings and retirement solutions, we can strengthen the intergenerational contract and put it back on the map.”

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