Millennials drive savings rush while baby boomers lag behind
Ahead of the new tax year, new research from investment service provider Willis Owen reveals that young people are more likely than any other group to save and invest in the next year.
According to Willis Owen, a cocktail of factors has led to a tipping point among younger people where the value of saving and investing early is finally being realised. This is before last weekís Budget, where announcements designed to encourage further saving were announced.
The research, conducted online by leading research firm Opinium before the Budget, asked people whether they expect to save or invest more in the next tax year than they will have done in this one. Almost half (42%) of young people aged 18 to 34 say they expect to save or invest more in 2015-16, compared to only 16% of their baby boomer elders (those aged 55 and above) and 25% of the population as a whole.
Jason Chapman, Managing Director at Willis Owen, commented:
ìThis savings split between millennials and baby boomers turns conventional wisdom on its head. The common perception of younger people is a generation disinterested in thinking about their finances, putting off big saving or investment decisions until later in life.
ìThe reality is somewhat different. Young people are driving a new culture of saving and investing and following last weekís Budget announcements, this could be set to improve even further.î
According to Willis Owen, there are a range of factors contributing to an increased financial awareness among younger people. The implementation of the new tuition fee model three years ago means that todayís graduates leave university with an average debt of £44,000. At the same time, the introduction of auto-enrolment in workplace pension schemes since 2012 means that younger workers are being nudged into thinking about their retirement earlier. The cost of housing is also a key factor, with the average first-time buyer now needing a deposit of £30,000 to make their first step on the housing ladder.
Jason Chapman added:
ìA combination of financial pressures and subtle nudges are helping younger people recognise the value of starting to save and invest early. This can only be a good thing. It also reflects what weíre seeing, with increasing numbers of younger people speaking to us about their investment and saving options.
ìInvestments can potentially deliver better returns when they are given time. So if todayís young people want to live comfortably when they retire, they cannot afford to put off thinking about it. The sooner people start saving and investing, the better.î
Willis Owenís research also reveals a stark regional split in saving and investing plans. Just over a third (36%) of all people in London and the North East (33%) intend to save and invest more in the next year, compared to just 19% in the North West and Wales.