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Legal & General has released a report looking at the way that Britain’s financial services industry can help to address the economic impacts of the demographic changes seen over the last 35 years.



The report, 353, looks at the intergenerational contract on a household and family level between the 2012 generation of 35 year olds and their parents’ generation – the 35 year olds of 1977. It seeks to understand how the flow of wealth between the generations has changed over the past 35 years and concludes that while 2012’s young families have changed their financial behaviour, their attitudes about home ownership and when to retire are remarkably similar to those of their parent’s generation.
 
35 year olds today tend to have higher income levels but lower asset levels than their peers of 1977. These changes are mainly driven by changes in the housing market with house prices trebling in real terms versus a doubling of salaries, with knock on impacts in all areas of life on a family and societal level.
 
353 explores inheritance, attitudes to gift giving within families, housing equity and pensions,  arguing that families have taken control over their own finances and move money between the generations much more than they did in the 1970s.
 
The report questions whether the current economic and demographic climate should mean that the financial services industry could help by redesigning and evolving their products.
 
It recommends three questions for debate:
 
1. Whether 25 years is the right length for a mortgage; as we live and work longer, but buy properties later in life, do mortgages need to adapt to keep pace?

2. Whether there is an ISA-equivalent for protection; how can people protect themselves financially, as for some protection may make more sense than saving?

3. How financial services companies can help people to manage a retirement process that could last a decade. Can more be done to move retirement timescale expectations nearer to reality, as today’s 35 year olds currently expect the same retirement as their parents?
 
John Godfrey, corporate affairs director at Legal & General, says: “Even though families are making new and different choices about managing their money, expectations of maturity milestones are very consistent across the generations. This could go some way to explaining the slow pace of change in many areas of financial product evolution. Our attitudes and aspirations haven’t kept pace with the speed of the changes over the last 35 years. We hope that these questions will encourage all parties to debate these issues and review the way they think about the future and help families to meet their goals.”
 
Polling undertaken by ComRes for the report found that his generation of 35-44 year olds have very similar views to their parents’ generation, thinking that the best age to leave home permanently is 23, the best age to move in with a partner is 27, the best age to have a baby is 29 and the best age to retire is 62.

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