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The Savings Squeeze: Young people locked out from the benefits of saving


This report uses data from the Wealth & Assets Survey in order to look at the reasons behind the inability for young people to be able to save. Key findings:

  • Young people would like to invest and save in property, but over the last decade the proportion of young people with zero property wealth has increased from 35% to over 40%.
  • Young people’s high cost of living and stagnating real earnings are the main reasons it is increasingly difficult for young people to save.
  • The proportion of owner-occupiers and landlords who are young people continues to decline, while a record-high number of young adults now stay on to live with their parents in their late 20s, indicating the financial pressures they face.
  • Although young people report feeling more confident that they will have a good standard of living upon retirement than they felt a decade ago, overall levels of saving have not increased.
  • Auto-enrolment has led to a welcome increase in the amount of young people with some pension wealth, but the median pension wealth of all individuals aged 16–24 remains zero. Since auto-enrolment, the median pension wealth of the 25–34 cohort has increased from £0 to £3,000, while the median pension wealth of all cohorts aged 45 and above has doubled, tripled, or even quadrupled.
  • Median pension wealth held by young people with some pension wealth has decreased by approximately a quarter over the past decade.
  • Only 6% of those aged 25–34 who are self-employed participate in a pension scheme.
  • Of those aged 16–34 who are employed, only 65% have enough savings to be able to withstand a three-month-long 25% loss of income, and just over half of those aged 16–34 who are self-employed could withstand the same loss of income.
  • Young people do not have access to the same generous defined benefit pension schemes, such as final salary schemes, enjoyed by previous generations.
  • Low levels of discretionary spending, property ownership and pension wealth indicate an insecure future for young people without adequate policy intervention.
  • Governments have provided age-related savings’ schemes in the past with high-yielding “Granny Bonds”. Similar schemes, along with subsidised savings accounts for young people from low-income families, should be offered to the young in conjunction with free financial advice services.