Interactive Investor

Working-age families have £4K gap in income compared to pensioner couples

Alice Guy shares interactive investor calculations.

19th September 2023 09:25

by Alice Guy from interactive investor

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Family with children 600

Interactive investor calculations, based on government figures, show working families now have £4,000 less in disposable income than if their income had kept pace with the rise in pensioner incomes since 1999.

Disposable income after housing costs




Actual disposable income for pensioner couples after housing costs




Actual disposable income for couples with children




Amounts if income for couples with children had risen at the same rate as pensioners




Gap in family incomes compared to pensioners since 1999


Assumptions and sources: government data on household incomes, gap in family incomes compares income figure for couples with children in 2022 to figure if family incomes had risen at the same rate as pensioner couples, figures are adjusted for prices in 2022, government data is averaged over three years.

Alice Guy, Head of Pensions and Savings, interactive investor says: “Rising pensioner incomes have been a success story of the last 20 years as the triple lock and rising private pension wealth, dragged pensioner incomes up by their bootstraps. The triple lock was introduced in 2011, to deliberately accelerate state pension growth above wage rises, pegging increases to the higher of wage growth, inflation and 2.5%. Unexpectedly, it was actually the 2.5% rule which boosted the state pension the most as inflation frequently dropped below 2.5% during the noughties.

“But incomes for families have risen a lot more slowly since 1999, with wage rises hitting the slow lane after the 2008 financial crash. Wages rises since that point have been negligible in real terms, so millions of families feel no better off than 15 years ago. Working age couples with kids are now worse off on average, after housing costs than pensioner couples, often finding themselves less able to save and more exposed to financial shocks like the cost-of-living crisis. It’s important to remember though that single pensioners are usually a lot less well off than pensioner couples and there are still millions of pensioners with no private pension wealth who rely solely on the state pension.”

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