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Are you richer than your kids, or poorer than your grandchildren?

Boomer and his children

There’s no doubt the war between the generations is hotting up as cash-strapped governments decide what services to cut and who to tax.

I used to get funny looks when I blamed baby boomer landlords for the high price of starter homes. Now that opinion is mainstream.

One MP has even written a book about it. The Pinch, by Tory minister David Willetts, is all about how the older generation have seized a disproportionate amount of wealth from their children.

And I’m inclined to agree. From job opportunities to peace to pensions to property, the post-War generation seems to have had it all.

Some argue though that the boomers didn’t get an easy ride. They tend to be boomers, funnily enough!

That said, I recently enjoyed a debate where a 30-something man took the opposite view, saying he pitied those in their 60s, and 70s. Our world was amazing, and getting more amazing by the day, he argued. Pining for the old days was pure nostalgia – the only people he felt envious of were his children.

So who is right, from a financial perspective as well as general quality of life?

I don’t have a definitive answer, but I do think there’s a couple of aspects to the debate that people are missing.

But let’s first recap the benefits enjoyed by the boomer generation, and also those of their offspring now in their 20s and 30s.

The boomers had it best…

Nobody is seriously arguing that the baby boomers born just after the war weren’t far luckier than their parents.

They didn’t suffer two World Wars. In Europe especially but also in the US, they also benefited from an expanded social safety net, more money in education, and infinitely superior and accessible health care.

But how do the boomers rank against their own offspring?

Pros of being a boomer:

  • Stable work environment (at least until the ’80s)
  • Affordable housing
  • Final salary pension schemes
  • Social mobility improved
  • Grammar schools for the bright
  • Relentlessly increasing standard of living
  • Emptier roads, beaches, and beauty spots
  • Lived through rock-and-roll and the 1960s

Boomer downsides:

  • Rigid careers
  • Hard to get loans or mortgages
  • No shops open on a Sunday
  • Sex not invented until 1963
  • Lived in the shadow of the atom bomb
  • Products (but not services) were worse and more expensive
  • Restaurants in the UK were awful
  • No computer games, plasma screens, mobiles or the Internet

Perhaps it was better to be born in the 1970s?

We all know that young people are automatically rich. But the boomers were young once, too, so their kids aren’t any luckier in that respect.

Here are some better points of comparison:

Benefits of being 20 to 30-something today

  • Everyone but total numpties can go to university
  • Foreign travel cheap and easy
  • Flexible ‘portfolio’ careers
  • Opportunity to work anywhere via the Internet
  • Far better if you’re black, gay, and possibly female, too
  • Boomer riches should trickle down eventually
  • More accessible investing: ETFs, trackers, Monevator
  • Endless cheap goods from China
  • Internet, computer games, 3D cinema, and Lady Gaga
  • Pornography on demand – how exciting!

Downsides for Generation X, Y, Z

  • Little opportunity to drift, try out different jobs
  • Graduate debts of £25,000 or more
  • Premium for being a graduate eroding
  • No job security
  • Housing 5-10x average starting salary
  • Endless competition from China
  • Must fund own retirement from income
  • Must also fund boomer retirement, national debt etc
  • Pornography on demand – how boring!

Isn’t it all about expectations?

As my lists of benefits and downsides shows, it’s no easy thing to compare the generations. And what makes it even thornier is the issue of expectations.

If you were a clever working class boy who passed his 11+ exams and got into grammar school in the 1950s – and from there a good university – the chances are high you’d enjoy a far better standard of living than your parents could have imagined.

Whether an engineer, doctor, architect or journalist, you’d join the educational and professional elite. You could easily own a big home by the time you were 35, plus golf club membership, a pony for the kids, and a wider family grudgingly admitting for the rest of your life that you’d done well.

Compare that to a graduate today. Raised on the expectations of her parents and the 24-hour have-it-all culture, she thinks that her degree in medieval poetry should afford her the lifestyle that her father enjoyed.

But she forgets that:

  • Fully half her peers also go to university now
  • She’s not in that top 5% like her dad – she’s just another A-student
  • Housing has been bid up by boomers and dual-income families
  • Life on the average wage isn’t like Friends or Sex in the City

To make things worse, she may also expect a career AND kids. Whatever floats your boat, but she can’t compare her life to her stay-at-home mum’s who was happy with baked beans and granny’s cast-offs through the ’60s.

It’s all down to expectations.

If you travel to rural Africa or India, you’ll find people likely happier than you living in shacks. It’s not patronizing to say it’s because they don’t expect much, so the arrival of the Internet or a new health service brings them joy.

They didn’t expect it, and it does.

What about the time value of life experience?

Expectations are about our hopes for the future. But what about the experiences we’ve banked?

The 30-something child of a boomer who says he feels better-off than his parents because life is improving every year is assuming progress is going to continue.

Remember the time value of money? This states, effectively, that a bird in the hand is worth two in the bush – that £1 today is worth much more than £1 in ten year’s time.

What is the time value of a year of our life? What if the future is much darker than the recent past?

We haven’t abolished war or disease, last time I looked. Then there’s global warming, extra competition from overseas, the end of oil, and goodness knows what else to worry about.

I’m pretty optimistic about the future, but I don’t deny those are all real threats.

In contrast, boomers have the advantage of knowing they’ve lived through most of their lives in relative peace and prosperity, and with their life expectancy increasing year-on-year.

I’m sure most boomers would swallow a pill to be 25 again and to take their chances, but that’s not an option for any of us. The comfort for a boomer is that while their children strive to be hopeful about the future, the boomers can look back fondly on a pleasant life lived.

My verdict: It depends who you are

I don’t think it’s possible to make a clear cut decision as to whether it was better to be born in the 1950s or the 1980s, even from a financial perspective.

Mix sex, drugs, and daytime TV into the equation and you’ve got a novel, not a blog article.

However I do have some hunches:

  • Generally, if you like stuff you’d rather be young now. If you prefer experiences I’d say the boomers had the better bargain.
  • If you were a bright lower middle-class or working class boy, you’d have done best to be born a boomer. With hard work, the grammar schools would have pulled you up in life, and society became more meritocratic with you. A great house, a stable family, and a secure pension was yours for the taking.
  • If you were born to rich parents, it probably doesn’t matter, but I think you’d have enjoyed the 1960s more. Chelsea, Greenwich Village, and Marrakesh was your oyster.
  • If you’re very clever and driven by money, the world is your oyster today. You can easily be on six-figures in The City before you’re 30. That would have taken decades a few generations ago.
  • If you’re a bright teenager from a less well-off background, I think you’ve still got opportunities today but you’ll have to strive more than the equivalent boomer. You’ll have to take on debt to get your degree, you’ll be competing with trust fund kids for unpaid internships, and if you want a creative career you may never own a house.
  • If you’re willfully ignorant, lazy, pregnant at 16, and/or irresponsible, thank your lucky stars if you’re under 40. Rather than judge you or ask you to improve yourself, our benefit system will shower you with riches – at the expense of those temporarily down on their luck or seriously disadvantaged (the job seekers, disabled, old, and so on).

Harsh but true.

Disagree? Let us know your own verdict in the comments below.

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{ 18 comments… add one }
  • 1 ermine August 26, 2010, 12:00 pm

    I think in one aspect you are ending up with a conclusion similar to where I ended up, even though I am a boomer 😉 This is reflected in your points 2,5 and 6

    The tolerance of discrimination in intellectual capacity meant that there was space to support the less well-off but bright to advance themselves because a) exams sorted people, at 11, at 16 and at 18, using norm references (ie compared to the rest of their cohort) and b) there were structures such as grammar schools and university grants that helped. There is a myth that every boomer got full grants at uni. I got nearly a full grant, because my Dad was on a blue-collar salary, but most other UK students at Imperial had their grants reduced and their parents were meant to make the amount up. Quite a few had none, though tuition fees were always paid by the LEA as far as I can recall.

    That discrimination by aptitude came at the expense of possibly writing off some people who could have come good. It also came at the expense of not supporting the feckless, for whom we seem to have developed an amazing tolerance, as summarised in your somewhat sharp last point.

    I don’t think Britain is rich enough to carry passengers any more. Some of the hoo-hah about the poor and families with kids being disproportionately affected by Osborne’s cuts is the corollary of the fact that these groups have disproportionately gained over the last 10-20 years. Rolling that back means they will be net losers from the change
    .-= ermine on: self-reliance- DIY and A-Levels =-.

  • 2 ermine August 26, 2010, 12:52 pm

    > I’m sure most boomers would take a pill to be 25 again to take their chances

    this has just sunk it, you’re kidding. All that angst, all that heartache, all over again you must be nuts! Even for the perfect skin and optimism it’s a rough deal 😉
    .-= ermine on: self-reliance- DIY and A-Levels =-.

  • 3 Andy August 27, 2010, 1:11 am

    David Willetts’ comment about the baby boomers taking a disproportionate amount of wealth away from younger generations is very interesting. As someone in my early 30s, I’ve long been concerned about providing ample financial stability for my later years (thank goodness for the wise advice on this website). In particular, I’m concerned what might happen when I reach the pre-pension age of about 50-65. It’s a reality that people aged 50+ who are made redundant can find it very difficult to get back into work. The potential for loss of income must be mitigated against through long-term, advance financial planning. I doubt many my generation realise this.

    Today, I suspect it isn’t recognised as a potential problem because the current 50-65 generation are the baby boomers who, as David Willetts points out, are frequently wealthy. Many have huge equity in their homes following years of above-trend property price rises. Unlike today’s students, they didn’t graduate from university oweing £25,000 and the high inflation in the 1970s, early 1980s and 1990s meant that whatever debt they did incur, be it mortgages or personal loans, were rendered low in real terms. Finally, with final salary pensions looming, the loss of income for this pre-pension baby boomer generation is often no big issue.

    But, in comparison, I predict but the 50-65 pre-pension age range will be an awful time for many in my generation. Right now, many of us are still paying off student loans. Too many of us are living in debt-fuelled lives thanks to low interest rates and easy credit. Yet few of us have managed to get on the housing ladder and even fewer have any kind of appreciable investments in place. Still fewer have decent pension arrangements, with the notable exception of those who work in the public sector. I fear for my generation when we reach 50+ because if/when ill-health or the economy forces some of us into involuntary redundancy, the consequences could be disastrous.

  • 4 George August 27, 2010, 5:36 am

    28-Up, 35-Up, 42-Up, etc. Time to do that experiment over? (28-Up is the first one that I saw here in America… the whole condensation & distallation of lives is fascinating to no end!)

  • 5 ermine August 27, 2010, 9:18 am

    Andy,

    > Many have huge equity in their homes following years of above-trend property price rises.

    Some people did well out of this, but you are making an extreme generalisation. I am a boomer, and buying a house was one of the worst personal finance mistakes I have ever made .

    You get wealthy in the 50-65 age range (I haven’t quite got there) by doing all the other things than Monevator recommends, but essentially by spending less than you earn. That adds up over the years. I lost more in the first three years of owning a house than your entire student debt, in real terms. I was daft buying then. The way you fix that sort of thing is rolling your sleeves up, doing without, and saving. And losing debt though it has taken 30 years for me to get rid of mine.

    It’s nice to blame another group of people for things that are wrong in life, though house prices now relative to salaries are no worse now than they were when I bought in 1988; I had to drum up a 25% deposit. When I was living in London in my 20s I blamed the previous generation (starting to sound familiar?) for buying their houses cheap and pumping the price up, I blamed rich Arabs for raising house prices in particular, and no doubt all sorts of others. It was only when I took responsibility for my own life choices, got a better job and moved out of the city that my situation actually improved.
    .-= ermine on: self-reliance- DIY and A-Levels =-.

  • 6 The Investor August 27, 2010, 10:17 am

    @ermine – Thanks for the thoughtful comments.

    Would you really not take the pill? I would, and I’m in my 30s. We’re not getting any younger!

    Regarding the grant, I got a partial grant, too, which my parents topped up. However I wouldn’t dismiss the differences between going to University in my/your day and now too lightly. There’s also fees they have to pay, plus there’s general lifestyle inflation (as you mention in your recent post). A student today pretty much needs a mobile and the Internet and a laptop, and I could even accept they need nice clothes. I dressed like a grungy rockstar in Oxfam swank, but the world has moved on.

    I don’t think we need to write people off, but I do think it’s pointless hordes of them doing degrees that will give them no financial advantage, and that to be honest they probably don’t even feel a calling for. They could do apprenticeships or government supported internships or similar.

    It is frankly shocking some of the people you meet in the younger generations who have been to University. I regularly meet ditzy girls who assure me they did an English degree but mention Potter and something called “The Twilight Saga” as their favourite books. Sorry, they might be fun light reading but if you came out of an English degree thinking those were the pinnacle of the English language, you had no reason being there.

  • 7 The Investor August 27, 2010, 10:20 am

    @andy – I hear your concerns. On an individual level, what I think we can do though is be prepared and take the opportunities that are available to our generation… emerging markets, Internet income streams, and at some point – if we’re not already in it – the start of a new bull market for equities. Every generation is played a different hand.

    Of course the danger is that even if you and I do this, that our compatriots don’t but instead spend etc, and we end up paying for their old age, too. Not much you can do about this except be alert to and try and use tax shelters, and possibly emigrate.

  • 8 The Investor August 27, 2010, 10:21 am

    @George – The UK version is a fascinating and somewhat heartbreaking TV show. Incredible the disparities, and also when you see a few of those bright smiling kids now in a spiral of drugs or similar in their 40s. 🙁

  • 9 ermine August 27, 2010, 5:39 pm

    > Would you really not take the pill? I would, and I’m in my 30s.
    > We’re not getting any younger!

    No, not in the slightest. There is a theory that happiness over life is U-shaped (theoretical paper here)

    In my life I followed the pattern – there is the angst of teenage and young adulthood, where it looks like all is lost and you’ll never get the physical wants of life (house etc). But you have the optimism of youth and the joy of, er, other pursuits, with few strings. In mid-life, though you set the foundations of wealth. This is even stronger for people with children because of the responsibilities they shoulder but also applies to the child-free, by observation the child-free come up for air 5-10 years earlier. The very existence of this site you got a jump on me as far as starting building wealth, I bought my first house at 28 and only began to accumulate wealth at 39 (barring pension savings also started @ 28). The 30s are hell, because you are losing the freedoms of youth and foregoing some of the fun but not seeing any of the reward – the shores of youth you’ve left are receding and the distant landfall of freedom from debt-slavery is too far to be seen.

    But something else is happening, invisibly. Anybody who is halfway intelligent is individuating – getting to know themselves and formulating the principles and values that give meaning to their life. The value of this was already known to the Ancient Greeks, in the aphorism “know thyself“. It’s hard to put a meaning on that, and the process is only at the beginning for me. I am only seeing glimpses of the prize, but what I’ve seen and the inspiring history of human philosophy is good enough to feel that were I given the choice I would want to go forward, not turn back for the pleasures of youth 😉 That’s my take on it and YMMV, but observation of friends and colleagues indicate there’s something to the theory for many people…
    .-= ermine on: self-reliance- DIY and A-Levels =-.

  • 10 Bret @ Hope to Prosper August 30, 2010, 1:42 am

    I was born in 1964, which was considered the last year of the Baby Boomers. I was a child in the ’60s, a teenager in the ’70s and a young man in the ’80s. I had some good times, I can assure you.

    Here are two observations, from my experience.

    1) We didn’t have it so easy financially. Jobs were stable, but we didn’t make a lot of money. Housing was cheaper, but many of us raised our families on single incomes. We worked our way through college, because our parents couldn’t afford to send us. Most of our parents got divorced in the ’70s, which ruined our family’s finances.

    2) We had a lot more freedom and self-reliance. When I was 10, my neighbor and I used to ride out on our bicycles at dusk, fish all night and come back in the morning. When I was 12, my Mom would drop us in the mountains on Friday afternoon with our backpacks and pick us back up on Sunday. My brothers drove home from Colorado to California together, when they were 16 and 14. Compared to kids now, we acted more like adults and we were treated more like adults.

    I would skip the pill. I still plan on having a lot more fun and being in my 40s isn’t so bad. It’s my children’s turn to inherit the world and struggle with all of the responsibility. It’s my turn to prosper.

  • 11 CD Rates Pro August 30, 2010, 2:15 am

    Great article! Really enjoyed reading your cultural notes of the boomers vs the 20 & 30 somethings….being of the later generation I think that you are correct in your ideas, the economic time for my generation and the ones to come are definitely challenging, but interesting as well, were everyone will have to live on a “survival of the fittest” mode. Thanks for sharing and opening up this interesting conversation 😉

  • 12 OldPro August 31, 2010, 11:03 am

    Never thought I’d link to The Guardian…Will Hutton blames sixties hippies for the recession… Ah I miss the days when we blamed the hippies…

    http://www.guardian.co.uk/society/2010/aug/22/baby-boomers-legacy-60-hutton

  • 13 The Investor September 1, 2010, 10:56 am

    @OldPro – Hmm, interesting analysis. Hutton has been trying to find a way out of the Statist, Corporatist corner he boxed himself into in the mid-90s for years though. Having failed to win the economic argument, I’m a bit skeptical of his new line of attack along moral lines.

  • 14 The Investor September 1, 2010, 10:57 am

    @CRP – It is always about survival of the fittest IMHO. What varies from era to era is how much we socialize the risks and rewards.

  • 15 The Investor September 1, 2010, 10:59 am

    @Bret – Thanks for your extensive comments and observations. It’s funny how a 40-year old man can strike such a nostalgic tone. (That’s not a dig – I’m like it myself and I’m in my 30s!) We truly do live in accelerated, youth orientated times.

    As for the pill, to you and @ermine I’d just point out there’s a finite about of life to live through, so I’d take the pill and risk acne and girl woes again just for that! I suppose it’s different if you have strong religious convictions or similar, though.

  • 16 The Investor September 1, 2010, 11:02 am

    @ermine – Very, very interesting stuff indeed, which I’m still digesting. I was thinking the other day one reason I’ve made my 30s so much harder for myself than I had to is because I didn’t spend money anything like as freely as my peers (plus that house non-buying debacle).

    Do you have no fear of death, though? Or is it just an externality that’s so inevitable it doesn’t factor into your equations? I have heard of happiness increasing with old age, and I’ve never really been able to square it with what seems inevitable decline. Perhaps the mind/body has ways/hormones.

  • 17 LondonStudent345 December 26, 2010, 10:58 am

    I think from now on only the ultra elite will even bother to go to University in Britain. And the rest? They’ll only manage if they plan on never ever owning their own house mortgage free and buying everything used. Opting out of the Status Quo basically. These are ways in which the children of Boomers will differ than their parents. It will definitely be a new paradigm.

  • 18 Jamie November 23, 2015, 10:39 pm

    There was some mention above of students with £25,000 debt… perhaps that was the case in 2010 when the original comments were posted. Here’s the update for those graduating in 2012 and beyond.

    Almost three quarters of those with student loans will still be repaying them into their 50s (Crawford & Jin, April 2014, Institute of Fiscal Studies, IFS Report R93):
    “Students will graduate with much higher debts than before, averaging more than £44,000… 73% will have some debt written off at the end of the repayment period”.
    http://www.ifs.org.uk/comms/r93.pdf

    A recent national equality report further confirmed my suspicions:
    “Our review shows how young people, out of all age groups, experienced the steepest fall in incomes and employment, worse access to decent housing and better-paid jobs, and deepening poverty,” says Laura Carstensen, commissioner at the EHRC.”
    http://www.bbc.co.uk/newsbeat/article/34667100/poor-white-boys-get-a-worse-start-in-life-says-equality-report

    It is far easier to pay new employees crap salaries than to downgrade those of existing (older) employees. Unsurprisingly, this, combined with the continued approach of forcing young people through universities and the every-increasing cost of housing leads to staggering inter-generational inequity.

    As a side-note, there is no “housing crisis”. There is a “people crisis”. Supply AND demand are both relevant factors, not just supply, as the current anthropocentric narrative would have us believe.

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