Was there a best year to be born?

It looks like a golden age to be retired, with many pensioners drawing on gilt-edged pensions, with the safety net of substantial capital tied up in their houses.

 But was there a ‘best’ year to be born?

If there was, then presumably it was best to have avoided the two world wars. If you were born in 1945, you may well now enjoy the safety net of your own property (which has risen in value beyond your dreams) and have a gilt-edged Final Salary scheme to live on until you push up the daisies. Indeed, you almost certainly didn’t even work until 65. However, leave it too late – say 1950 – and you may be trying to retire now, but be faced with rapidly falling annuity rates.

Actually, one has to be careful of over-generalisation. Research carried out by Marketing Sciences (the At-Retirement Monitor) amongst people around retirement  suggests that the experience of retirees is  variable.

While two-thirds of people have been retiring before age 60, there are increasing numbers having to work beyond State Pension age.

A lot depends on your pension scheme – only 23% of those retiring now expect their main source of income to be an occupational scheme, with 45% being  reliant on the state pension as their main source. It also depends whether you are able to work until retirement age – 44% of retired people were forced to retire when they did – primarily due to ill health, which will have reduced their retirement income. Indeed, if you were a smoker born in 1945 you may not have actually lived until now!

Moreover, if you made it to retirement, you may have had to return to work, faced with an effective rate of inflation for retired people is much higher than it is for the general population and is reducing the value of savings and pensions. See link here

That said, young people now are faced with the need to save far more for retirement and to spend more on education and housing than their parents ever were.

So is it not likely that being born before, say, 1970 will result in a more prosperous retirement than being born after that?

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Nigel Hufton
01962 842211
Article date - 17/05/2012
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