Young must save £33 every day to be as rich as their parents

Young people have an economic mountain to climb. The financial crisis has destroyed their jobs, their income, and any chance they had of building up any assets. At this stage there's an incredible £365,000 gap between the wealth of older households and the wealth of those in their early career. To make up the gap, the experts say, young people will have to save £33 a day for 30 years.

The research, led by Professor John Hills at the London School of Economics, found that people aged 25-34 had suffered far worse than any other age group in the financial crisis. They had the greatest drop in full-time employment, the largest rise in unemployment and the greatest falls in real wages.

While wealth rose for households aged over 65 between the start of the financial crisis and 2012, it fell for younger ones. In fact, typical incomes for those in their twenties has fallen 20% in the past five years.
%VIRTUAL-ArticleSidebar-wealth%
By 2012, the average household aged over 65 was worth £425,000, while those in their late twenties and early thirties were worth an average of just £60,000. In order to make up the difference, it would require young people to save £33 a day for the next 30 years.

Hills admits that this is highly unlikely. Instead, the only hope this group has of matching their parents' wealth in retirement is inheritance. He says: "Their future prospects now depend more than ever on what happens to the wealth of their parents and grand-parents. But that is very unequally distributed, and so will be who gets help and benefits from inheritance."

Is this a crisis?

He says that this isn't just a crisis for young people, but also has "ramifications across society and for many social policies." There's an argument that it makes a mockery of the idea that universal pensioner benefits need to be protected at all costs, while working people on low incomes lose benefits.

However, there's another side to the argument. The financial crisis has played its part, but the lion's share of this disparity is due to house prices. Older people bought houses when they were cheap, and they're now worth hundreds of thousands of pounds, so they are wealthy. Young people don't have the same advantage, so naturally haven't yet been able to build up equity in a property.

You could argue that the figures in this report aren't indicative of older people living the high life while younger people struggle - it's largely down to how much of their own home they own.

But what do you think? Is this a sign that something needs to be done to make society more equal - or just a nature consequence of the fact that younger people haven't had a chance to accumulate assets? Let us know in the comments.

Divided Britain on AOL Money

Pensions gap illustrates the divide in Britain today

UK's highest-earning boss earns £119,836 a day

Gender pay gap: men are also losing out