Younger generations 'less wealthy'

Young people are on course to be less wealthy than older generations, research has found.

Wealth went up in working-age households by more than inflation in the years after the financial crisis but the increase was fuelled by pension values, according to the Institute for Fiscal Studies (IFS).

The respected think tank warned that younger generations would fail to match the wealth accumulated by those a decade older than them based on current rates.

Dave Innes, a research economist at the IFS and an author of the report, said: "Despite the financial crisis, household wealth on average increased in real terms over the late 2000s, driven by increases in private pension entitlements.

"Even with these increases in average wealth, working-age households are at risk of being less wealthy at each age than those born a decade earlier."

Researchers did not analyse why younger generations were set to be less wealthy but lower levels of savings, student debts and the struggle to get on the housing ladder were believed to be likely to play a part.

The study was based on a series of interviews with the same households carried out between 2006 and 2012 as part of the wealth and assets survey.

Average property wealth fell in real terms over the period as house prices fell, while pension wealth went up by £13,000 for households aged 25-34, £32,000 for 35-44 age group and £38,000 for 45-54-year-olds once adjustments were made.

Financial wealth increased by around £4,000, £1,000 and £6,000 for the same age groups on average over the period.

But the report found wide variations in household finances over the period, with a quarter of the 45-54 age group suffering a fall in wealth of more than £69,000 while the same proportion reported an increase of more than £138,000.

Rowena Crawford, a senior research economist at the IFS and one of the authors of the report, said: "It is striking how many individuals do not expect private pensions to have a role in financing their retirement, let alone be their main source of income.

"It will be interesting to see how these attitudes change as auto enrolment into workplace pensions is rolled out."

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Younger generations 'less wealthy'

Changes to stamp duty mean that the additional costs surrounding buying a house will be much lower in 2015 than they were in 2014. The stamp duty bill for a £280,000 house has fallen from £8,400 to £4,000.

On top of that many experts are predicting that house price growth will slow in 2015 giving buyers a chance. House prices dropped by 5.1% from November to December, according to online property resource Rightmove. It argues that there are more houses coming on to the market meaning demand isn’t as fierce as it was in 2014.

Mortgage lender Halifax also believes house price growth will slow in 2015 thanks to the election and rising interest rates. It is predicting house prices rises of 3% - 5% in 2015 compared to the rise of 8% seen in 2014.

The oil price plummeted in 2014 from $115 a barrel in June to $68 in December leading to smiles at the pumps as petrol and diesel prices dropped to levels not seen since 2009. The average price of petrol was just 119.83p in the second week in December.

Experts are predicting that the oil price will continue to fall in 2015 due to low demand and strong supply. And this is great news for drivers. Some economists are predicting that petrol prices could fall as low as £1 a litre in 2015

The low oil price isn’t just good news for drivers, it also means fuelling aeroplanes is costing a lot less than it did six months ago. This is great news for airlines who have struggled with soaring fuel prices for years. Hopefully the fact flying the planes has just got a lot cheaper might mean fares fall too, but I wouldn’t hold your breath.

He may lost both the X Factor and I’m a Celebrity Get Me Out of Here but Jake Quickenden looks set to make a lot of money in 2015. The Mirror believe he will rake in a six-figure salary next year thanks to modelling, music releases and personal appearances. His management were already smart enough to get the wannabe onto I’m a Celeb just weeks after he left the X Factor so Jake should have a busy, profitable 2015.

New savings bonds aimed specifically at over 65s will be launched in January. These ‘Pensioner Bonds’ are designed to help the older population who are struggling on fixed incomes get a decent return on their savings.

The one-year bond will pay an annual interest rate of 2.8% and the three-year bond will pay 4%. Those rates are substantially above anything available on the open market. Investments are limited to £10,000 in each bond and you are allowed two bonds per person.

The fly in the ointment is that pensioners will have to pay income tax on their returns. But even taking that into account the Pensioner Bonds beat the rest of the market.

The government has capped the issue at £10bn and bonds will be sold on a first-come, first-served basis so pensioners will need to be quick off the mark as these bonds will sell out fast.

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