Happy Birthday Boomers
Last month on February 8, I claimed British baby boomers turned 75. This was based on a very rudimentary calculation that if there was to be a starting date for baby boomers – the post second world war generation – why not nine months on from Victory in Europe (VE) Day on 8 May 1945, when a sudden burst in the population was underway resulting in almost one million (995,226) babies born in 1946 and a further 1.2 million the following year (1). Hence February 8 – definitely a cause for celebration!
Although it is a bit cheeky – it does underscore a few important points. Some we all recognise – we are a rapidly ageing society with many more people reaching old age but also living for longer.
The UK’s over-75 population is expected to pass 6m next year and grow by another 50% by 2040 to reach 9m. Compare this to the average life expectancy at birth in 1946 which was just 68.9 years (2). Some will have gained two extra decades over their lifetimes thanks to improving living standards, medicine and technology. Another cause for celebration.
They can also look forward to many more years of life going forward, with the average life expectancy of a 75-year-old man today being 87 years and 89 for a 75-year-old woman. Both have a one in four chance of living another five years beyond this (3).
For me, the most startling growth is among the very oldest, as almost 20,000 (19,119) baby boomers who turn 75 this year can expect to live long enough to receive a letter from Buckingham Palace on their 100th birthdays (4) in 2046, when the centennial VE Day celebrations will also take place. In 1946 there were less than 300 centenarians in England and Wales (5).
It is inevitable that the financial landscape since they were born has also changed fundamentally in terms of the growth of asset classes and increased welfare spending. The average UK house price in 1946 was £62,488 in today’s money (£1,459(6) at the time) compared to £230,920 in 2021 (7); the average weekly income was approximately £214 in today’s money (£4.60 (8) at the time) compared to £521 now (9); and State Pension paid out £1.6s per week for a single person and £2.2s for a married couple in 1946 (10) – either £54 or £88 in today’s money – compared to £175.20 in 2021 (11).
However, the growth of the oldest has not been reflected in that of younger generations with over-65s already outnumbering people aged 14 and younger across the country (12.7m vs. 12m). By 2032, the nation will be home to more over-65s than under-20s (12).
This has resulted in a greater share of public spending being allocated to older generations. Welfare spending on Britain’s pensioner population grew £42bn in real terms from £90bn in 2000/01 to £132bn in 2019/20 (13). This poses fiscal challenges with the risk that direct taxation as a method to fund public spending is framed as a burden on the working young to the old and wealthy. This is simplistic and unwelcome.
Yes, many of the baby boomer generation have benefitted from final salary pensions, free university education for themselves or their children, and house price growth which younger age groups are unlikely to enjoy.
However, we must not lose sight that 1.9million pensioners still live in poverty (14) and many face the challenges of making inadequate retirement savings last over ever longer lives including meeting their care needs.
It also fails to recognise the hugely important and valuable role our elderly play in our communities as workers, employers, carers, volunteers and tax-payers. Many assist younger generations financially, with a quarter of equity release customers using some of their property wealth to support family to pay off debt or help them onto the housing ladder by providing a ‘living inheritance’ (15).
1 Statista: Number of live births in the United Kingdom (UK) from 1931 to 1960: https://www.statista.com/statistics/281965/live-births-in-the-united-kingdom-uk-1931-1960/
3 ONS life expectancy calculator
7 Nationwide: House Price Index, December 2020: https://www.nationwide.co.uk/-/media/MainSite/documents/about/house-price-index/2020/Dec_Q4_2020.pdf
9 ONS: Average weekly earnings in Great Britain: January 2021: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/january2021
10 The Pensions Archive Trust: www.pensionsarchive.org.uk/107/text/174/files/State%20pension.pdf
11 DWP: Benefit and pension rates 2021/22, based on the New State Pension: https://www.gov.uk/government/publications/benefit-and-pension-rates-2021-to-2022/benefit-and-pension-rates-2021-to-2022#state-pension
13 DWP, Autumn Budget 2020 expenditure and caseload forecasts
14 Joseph Rowntree Foundation, UK Poverty 2020/21: https://www.jrf.org.uk/report/uk-poverty-2020-21
15 Equity Release Council, Beyond bricks and mortar: the changing role of property in later life financial plans
CEO, the Equity Release Council
Jim was appointed CEO of the Equity Release Council in June 2018. He joined from Reform think tank, where he was Deputy Director and Head of Research. Prior to this he was an Expert Adviser at the Department for Work and Pensions, initially supporting Lord Freud, then Welfare Reform Minister.
Jim has extensive experience of retirement and social care funding having led the Corporate Affairs functions at specialist life assurers Britannic Retirement Solutions, Just Retirement and Partnership Assurance. He is an adviser to the Intergenerational Longevity Commission-UK, a leading longevity, ageing and population change policy unit. Jim is a former tax and trusts lawyer.