Grant Woodward: Generations staring down the barrel of a deeply dismal financial future

The reason? That bombshell delivered with laser-guided precision at the fag end of this year by the Institute for Fiscal Studies, warning those of us born in the 1960s and 70s that we’re staring down the barrel of a deeply dismal future.

I say bombshell, but it’s nothing of the sort. I’ve had a hunch for some time that my peers and I are odds-on to be the first generation since the Second World War to end up worse off than our parents in retirement. I’d have put money on it, if only I had any.

Other than confirming our worst fears, the IFS report told us little we didn’t already know. We are less less likely to own our home. We have smaller state and private pensions than our predecessors. We have no more savings or income than them. In other words, we’re pretty much up the creek without a paddle.

We have to be careful here, though. It’s far too easy to give the impression of some sort of misguided sense of entitlement. Don’t get me wrong, I fully recognise the hard graft my parents put in to get to a point today where they enjoy a decent standard of living and a couple of foreign holidays each year.

At the same time, however, it’s hard not to think that the odds were stacked in their favour – certainly more so than they have been for their children and grandchildren.

My father, for instance, left school at 15 with a solitary O-level. On entering the world of work on a reasonable, but certainly not eye-popping salary, he and my mum, who worked as a cashier in the local bank, were able to afford to buy a pleasant semi in a decent part of town.

Back in 1964 they paid the princely sum of £3,290 for the home, a figure that today equates to just over £56,500. The other day I looked the house up on the property website Zoopla, where it’s currently valued at just shy of £235,000.

At no time in his life did my father have to overstretch himself financially when it came to property. We moved around a fair bit, but never once did he buy something with a price tag that was more than two-and-a-half times his salary.

Not only that but he was buying houses at a time when there was serious money to be made. He sold the second home he bought for 10 times the amount he’d paid for it just a dozen years earlier. Another made him a tidy £300,000 profit over the course of two decades.

I don’t begrudge him any of this, but the trouble is that it’s made things an awful lot harder for those who have followed.

Today, the average full-time wage is around £26,500. The current average house price where we live is nearly seven times that amount. It’s little wonder then that those born in the 1970s are taking longer to get onto the housing ladder, with the rate of home ownership hovering at around the two-thirds mark, compared to a peak of four-fifths for people born in the 1940s and 1950s.

And even when they do get on the ladder they have little option but to take on the sort of mortgage repayments that would have brought my parents out in a cold sweat if they didn’t have access to the oodles of money they had made on a previous sale.

It doesn’t help that wage growth in many sectors has run aground on the rocks of recession and its lingering after-effects. At a point in their careers where their predecessors were busy landing hefty pay increases, the children of the 1960s and 70s have seen their salaries stagnate.

Then of course there is the late, lamented final salary pension plan. No longer can we look forward to those generous pay-offs at the age of 60. Nope, it’s defined contribution all the way for us – probably until a couple of weeks shy of our 70th birthdays. The bit on my annual pension statement that tells me how much I can expect to receive in retirement is enough to make you weep.

The state pension will also arrive a lot later than it did for those who came before us. Changes forced by the cost of paying for an ageing population, meanwhile, will result in future pensioners receiving less than those born in 1940 do.

I know, I know, we should be grateful for the prospect of living longer than previous generations. But if those extra years are spent worrying whether there is enough money to carry on living, is it really that good a deal?

For many, it leaves them having to cling to the hope that the growing wealth of their parents will lead to a financial windfall when they go to see them through. What a grim scenario that is.

And anyway, those banking on a chunky inheritance are likely to be disappointed. In many cases old-age care costs will swallow up much or all of the money that pensioners had hoped to leave their children. The Government may have pledged to introduce a £72,000 cap on the bills but that adds up to a staggering £144,000 per couple.

Still, if we think it’s grim for us, spare a thought for our children. They have all this to look forward to along with the suffocating debt of tuition fees, the prospect of zero-hours contracts and even less chance of an inheritance from their already skint parents thrown in for good measure.

The problems, I fear, are only just beginning.