This Crocodile Nation
What do older people in Britain have in common with adult male crocodiles? Read on to discover why the UK has become a 'crocodile country'.Earlier this week, I was talking to a young student who works in my local pub. I was telling him about a bizarre nature documentary I'd seen in which an adult male crocodile began eating its own young shortly after they were born. At the time, I turned to my son and said, "Don't worry; I'm not going to eat you!"While relating this tale, it suddenly struck me that the UK has become something of a 'crocodile country' because, in financial terms at least, we are also eating our own young. What I mean is that the younger generation is losing out big-time to their parents and grandparents in the wealth stakes.Indeed, as I explained in The Golden Generation, although people aged over fifty account for a third of the UK population (or twenty million people), these adults own three-quarters (75%) of the UK's entire net wealth. In fact, this age group owns £5.16 trillion of the UK's total wealth of £6.89 trillion, making them WOOPies, or Well Off Older Persons.At the other end of the scale, a recent survey revealed that the total net wealth of the under-35s in the UK is -- wait for it -- a big, fat zero. In other words, once their debts are taken into account, younger adults have no personal wealth whatsoever. Who pinched their purse? How can this be?How can the over-fifties be so asset-rich (with average wealth amounting to £258,000 per head), while the under-35s are, in effect, flat broke? One answer is that older people have worked, saved and invested for much longer, so it's entirely obvious that they should be richer than their children. However, I would go further and say that this massive transfer of wealth between generations is down to one crucial trend: rising house prices.As we all know only too well, UK house prices have been rising for over a decade -- a typical property has seen its value triple in the past ten years. Given that the older people tended to marry and have children in greater numbers than we do today, they own a higher proportion of Britain's larger family homes. As these properties have risen most in value, the vast majority of housing wealth is concentrated in the hands of the over-fifties.Going back to my analogy of a crocodile eating its own young, the massive concentration of wealth in the hands of older generations creates severe problems for younger members of our society. Rising house prices have put enormous pressure on affordability, even at the cheaper end of the housing spectrum. In effect, would-be first-time buyers are being prevented from owning homes by a combination of extraordinarily high house prices and rising interest rates.Of course, this divide between the generation in terms of personal wealth has always existed, but not to the extent that it does today. Alas, although younger generations expect to inherit much of their parents' wealth, the Chancellor lurks in the wings, waiting to levy hefty Inheritance Tax on estates worth more than £300,000. Thus, a fair slice of this future dowry will be seized and redistributed across society, so don't bank on an inheritance to set you straight!Finally, it goes without saying that young people won't put up with being eaten alive forever. At some point, they are going to bite back, probably by refusing to bankroll the massive pensions and benefits required to support the Baby Boomer generation. We need young workers to pay their way and support the UK's ageing population, so does it really make sense for us to devour our own children?More: Visit The Fool's Retirement and Pensions and Property and Home centres for more advice and articles.Many thanks to my friend Tim at The Fox for inspiring this article.