New research suggests that the personal household wealth of the over-50s generation has rocketed 45.6 per cent in the past five years to in excess of five trillion pounds; however, tougher times lie ahead for future generations of retirees.

The latest research from Abbey Savings has revealed that people over 50 are collectively benefiting from an unprecedented level of personal wealth. With a collective wealth over five trillion pounds, at 2006 levels, this means the personal wealth of this demographic is greater than the annual GDP of every nation except the USA.

Astonishingly, it is also greater than the combined GDP’s of Germany, UK and France. This underlies the financial and social power held by this demographic, which owns nearly 75 per cent of the UK’s wealth.

On current projections, the 50+ generation are likely to become even more influential in years to come: this segment currently comprises 34 per cent of the population. However, in 25 years time, the 50+ population is likely to grow to 29 million and account for 43 per cent of the population.

If personal wealth continues to grow at the rates of the past five years, this age group, Abbey claim, will hold personal wealth worth $78.3 trillion, or £40 trillion by 2043. This is six times the current annual US GDP.

“The 50+ segment of society is already transforming the way we live and work. They hold 60 per cent of all savings and are responsible for over 40 per cent of all consumer demand,” said Reza Attar-Zadeh, Head of Savings at Abbey.

“If personal wealth and population continue to grow at current rates, the 50+ demographic will become even more dominant.”

However, while some Baby Boomers can enjoy the full trappings of their wealth as they grow old, buoyed by sizeable company pension schemes and phenomenal house price growth, not everyone will benefit. Research published this week suggests that two-thirds of pensioners can’t live comfortably on state pension handouts alone.

According to the Friends Provident research, while some people may benefit from the annual increase in state pensions, more than two-thirds (68%) of UK retirees admit that they would need more than Government handouts in order to live comfortably.

“Of course we recognise that not everyone will benefit from this explosion of personal wealth,” admits Attar-Zadeh.

By ignoring how much they need to save to live comfortably in retirement or how soon they need to start saving, many Brits are facing a potential pension shortfall.

“Whilst the recent modest state pension increase may see more going into people’s pockets each year, our research has found that the vast majority of people need far more money than the state provides in order to live comfortably,” comments Jeremy Ward, head of pensions marketing at Friends Provident.

Some economists predict that retirement planning has been affected considerably in recent years by house price rises.

‘Rising house prices reduce the need for people to save to finance their retirement,’ writes Martin Weale, the Director of the influential think-tank the National Institute Economic Review (NIER), in the organisation’s latest quarterly publication. ‘What has seemed to them [the older generation] like manna from heaven is in fact financed by the younger people to whom they sell their houses.’

The Friends Provident research seems to back this up, claiming that while 69% of current retirees have adequate funds to support themselves in retirement, those still in employment are looking at a different picture when they retire, with a third (32%) anticipating that they will struggle financially and one in seven (14%) expecting to wish they had saved more for their retirement.

Therefore, while today’s over-50s rejoice at the massive financial gains they have made as a result of house price rises, quickly adopting new modern stereotypes of SKIing – Spending the Kid’s Inheritance – indulging in overseas properties and luxury holidays, it is the generation beneath them – today’s 20 and 30 year olds, who will feel the pinch the most when they retire. Three quarters of people yet to retire expect to need more than £600 a month to live comfortably, significantly more than the current state pension provides.

“Considering that a quarter of people haven’t yet started planning or don’t intend to plan for their retirement, this is something they can only dream about,” concludes Jeremy Ward of Friends Provident.