Help
Cheer up, it may never happen! That's what my father used to say to me when teenage gloom descended and he was usually right.
Those words of wisdom came to mind this week when listening to another gloomy speech from Sir Mervyn King, Governor of the Bank of England. His predictions about the future would be more compelling if he had been more prescient in the past about the mess we find ourselves in at present. As investment guru Warren Buffett observed, there are only two types of expert when it comes to financial forecasts: those who don't know and those who don't know they don't know.
So, on the basis that two views make a market, here are some reasons to be cheerful to weigh in the balance against Mr King's pessimistic predictions. Baby boomers people born within 15 years of the end of the Second World War (SNP: ^WARY - news) comprise the majority of The Telegraph 's readers and many continue to enjoy a substantial share of Britain's wealth.
According to the Office for National Statistics' most recent Wealth in Great Britain report in 2008: "The group with the highest average total household wealth was the 55 to 64 age group. This group had a mean (or average) of £634,900 for total wealth including private pensions; and a mean of £338,600 excluding pension wealth."
Even allowing for shrinkage since the credit crisis gripped, those are eye-stretching figures and quite contrary to the current conventional view that we are all drowning in a sea of debt. One explanation is that the ONS also found that people aged over 55 owned nearly half or 47pc to be precise of all the housing wealth in the country.
Even after recent setbacks, decades of home ownership proved an effective means for many baby boomers to accumulate tax-free wealth.
That's also good news for many members of younger generations. They may well feel less fortunate, with student debts where their parents got grants, and a mortgage famine, which keeps them in rented accommodation until an average age of 37 or more than a decade after their parents bought first homes.
But the automatic transfer of the inheritance tax (IHT) nil-rate band between married couples and members of civil partnerships raises the threshold for this tax to £650,000. That removes most families from fears of IHT and means John Major's vision of "wealth cascading down the generations" could soon become a widespread reality.
James Thorpe of HSBC (LSE: HSBA.L - news) told me: "Our projections estimate that baby boomers will leave to generations below them over £1 trillion or £1,000bn between now and 2034. This is more than any generation before them and more than the generations following them.
"Baby boomers have a healthier mix of income provision and asset wealth than we expect their offspring to have. Just by being able to leave £1 trillion over the next 23 years would suggest many will have more than enough to live on in old age. Clearly, some baby boomers will be recipients of some of this wealth over the next 25 years too."
Similarly, analysis of Land Registry and ONS data by Key Retirement Solutions suggests that people aged over 65 own about a sixth of all the wealth in bricks and mortar in London and the South East. You can see how much housing wealth pensioners own in other regions in the graphic on this page.
Bad news will, however, continue to make more sensational news than good news. So, for many baby boomers, the predictions of disaster they see every night on television will continue to differ from their own daily experience of reality.
Unlike the credulous young, however, older people also have the advantage of being able to remember economic crises in the 1990s, 1980s and earlier to put today's troubles in perspective. Or, as my father likes to point out from time to time: "Worse things happen at sea."
ANYONE DISAGREE WITH THIS?
This post has been edited by john42: 24 October 2011 - 05:57 PM
:gathering: :detective:
