Millennials have it tough, but what about their kids?

by Kyle Caldwell from Money Observer |

Money Observer's Prudent Parent considers the financial future for forthcoming generations.

It is well documented that when it comes to personal finances, the millennial generation (to which I belong) are worse off than their parents.

However, some older readers of the babyboomer generation may vehemently disagree and point out they were simply shrewder savers. They also faced the challenges of interest rates hitting double-digit territory in 1988 and remaining at such levels until late 1992; moreover, over the past decade savings rates have been cut to the bone.

But against that, there is no denying that babyboomers have benefited from the strongest two-decade period of historically high house price growth. In addition, for those who have them, there is a reason why final salary pensions are labelled 'gold-plated'.

The reality for my generation is that it is much harder to get onto the property ladder, we will be working longer than our forebears, and thanks to our defined contribution pensions we will have less reliable and probably smaller sums in retirement.

A large number of boomers help millennials to bridge the property ladder gap, with the Bank of Mum and Dad the ninth-biggest lender in the UK.

According to recent research by MoneySuperMarket, children are handed £9,050 on average, with nearly one in 10 receiving £20,000 or more. It also found that 15% of parents remortgaged to help their children.

But this, as Rachel Wait, consumer affairs spokesperson at MoneySuperMarket, points out, is only viable if the parental property has gone up in value; and parents will need to be sure they can afford to keep up with their new repayments. She adds: "Try to be realistic – only release equity to help your children with life events if you can really afford to do so."

This got me thinking: in 25 years' time will I be able to do the same for my son? Probably not, I'm afraid son; now, let's sit down and have a chat about house price inflation.

This article was originally published in our sister magazine Money Observer. Click here to subscribe.

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