David Behrens: Debt we’ve created for our children falls on our shoulders too

Getting on the housing ladder has never been more expensive
Getting on the housing ladder has never been more expensive
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I believe it was the American playwrights George S Kaufman and Moss Hart who in the 1930s conceived the notion that it was no use sitting on a pot of money because you were never going to be able to take it with you.

Transplanted to the present day, their hypothesis is half right. You can indeed not take it to the grave – but you can’t afford to spend it either.

It emerged this week that most of the wealth held by retirees and those soon to retire is likely to be bequeathed to future generations rather than spent. I had thought as much for some time, so I’m glad there is now a report to which I can point when Mrs B next accuses me of being penurious. I think the exact words she used were skinflint and Scrooge.

But my own mortality, it seems to me, is no reason to alter my lifelong view, instilled in me by the climate of austerity into which I was born, that money is there to be saved and not spent, if at all possible. If I don’t need it in 10 years’ time, my son certainly will.

He will, like everyone else of his age with a university education, start his working life indebted to the state by something like £20,000, and will have to save up as much again if he is going to raise the downpayment on a house. So he might as well have mine, or at least the value of it.

It is impossible for anyone of my generation not to feel sorry for the current crop of graduates. My further education was laid on for me, and when I had finished it, my bank account was in credit. The deposit on my first house was about £1,000 – a lot of money at the time, especially compared to the £3,500 total price of my parents’ semi a decade earlier – but proportionally nothing like the £33,000 that the average first-time buyer today must put down. Wages have gone up in the intervening 40 years but they haven’t risen 33-fold.

So the least I can do is to preserve whatever assets I have for my son’s legacy. If that means spending my retirement modestly, so be it.

Assuming the figures are right and it’s not just me locked into this mindset, the principal casualty of this spendthriftiness will be the travel industry – especially that part of it concerned with selling entertainment cruises to the Caribbean. Jane McDonald is going to have to sing two-part harmonies with herself.

I had long since written off the possibility of twice-yearly trips to Mustique, in any case. Malham it will have to be instead. If I want a foreign trip, I’ll try Merthyr Tydfil.

I could, of course, take the view that the expensive education being lavished on my son will propel him quickly to the top of the salary tree, thus leapfrogging me by several places. He is studying mathematics, a subject, I’m told, that is highly sought among employers – although I have yet to see one fling open his office door to ask if there is a mathematician in the house – so I have no doubts about his ability to succeed.

But he is worried about financing his future, as are his friends. It’s that debt and the cost of a house that hangs most heavily on his shoulders. The fact is that it will take today’s young people perhaps 20 years longer than my generation to break even.

I blame myself for his predicament. Had I been less tardy in starting a family, he would have been earning enough to support me long before I had thought about picking up my pension. And I never did like the idea of other parents in the school car park mistaking me for someone’s grandfather.

But from a purely financial perspective – and here you can see how the mathematician’s gene was passed down – it may yet turn out to be a blessing.

Most beneficiaries of a legacy, this week’s reports tells us, do not see their inheritance until they are well into middle age, because the money passes to the surviving partner before it filters down. In his case, he might come into some if it when he needs it most. Clearly, Mrs B’s views on my parsimony are not misplaced.

The irony in all of this is that saving for our retirement is a concern that preoccupies us for most of our lives. We set ourselves a goal that one day we may stop saving in order to enjoy the fruits of our labours. But the debt we have created for the next generation means that our own account will never truly be out of the red. We all living on the never-never, paying tomorrow for our profligacy today.

It’s not surprising that our children are uncomfortable about their future. Their debt is ours, too.