Sunday, October 23, 2011

The dilemma for the post war generation

An article in today’s Telegraph says that those of us who are in our sixties should feel privileged. As the writer says, we enjoyed free love, free school meals, free university education and are now reaping the benefits of well defined pension plans.

However, as the article points out, the greatest benefit for us has been the growth in house prices over the last forty years. We might have struggled for the first years with our mortgage payments but as our earnings grew the ratio of payment to income diminished. When Pam and I retired, the amount we paid for our mortgage each month was less than 4% of our income.

The article goes on to say that, with the wealth that we post war “baby boomers” have accumulated, there are tough decisions to be made. Should we use that money to help out our children who face a far more precarious financial future than us or should we be mindful that we may need that money to finance our own old age. We have to face the reality that our physical and mental health may well decline to the point where we need residential care which will not be provided for us by the state; nor will it be provided for by our children – why should it be? The days when you looked after your parents in your home are long gone.

I remember when my parents sold the shop that they ran in Cawthorne, South Yorkshire, my father wanted to divide the money between my brother and I there and then. My mother, being more prudent, argued that they might need that money themselves. She knew that, once it was given away, they would be left high and dry without any savings to fall back on; their sole resources would be their pensions. My mother was right, having brought up her children and supported them into adulthood, it was up to us to create our own financial resources. Although it is natural to take care of your children and help them as much as you can, you must remember to also take care of your own needs as well. 

One thing is certain in all this, it takes a lot longer to earn and save money than it does to spend it!

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