'Peter Pan generation’ delays life milestones due to financial insecurity

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‘Peter Pan generation’ delays life milestones due to financial insecurity

08/08/2018
PROTECTION
  • People in their early thirties are one of the UK’s least financially resilient groups
  • One in four (24%) feel worried about the financial impact of life milestones
  • One in six (17%) of this group have put off major life milestones, such as having children and buying a home due to a lack of financial confidence
  • Four in ten (43%) don’t feel confident about handling a personal financial crisis, with nearly three quarters (73%) falling short of the MAS recommended guidelines for financial resilience.

 

A new study from LV= reveals that people in their early thirties are putting off life milestones such as having children or buying a home, due to being one of the least financially resilient groups in the UK.

A quarter (24%)1 of the 30-35 year olds in the study, of which there are 4.7 million in the UK, feel worried about the financial impact of life milestones – double the national average (12%) . Nearly one in six (17%) say they’ve put off major life milestones because they don’t feel financially mature enough.

LV= has worked with Dr David Lewis, an associate fellow of the British Psychological Society, to identify this group – aged 30-35 years – as the ‘Peter Pan Generation’. Separate research by Dr Lewis revealed that seven out of 10 of those under 35s believe their youthfulness will last forever [3], so they don’t properly prepare for risks the future may hold.

Following on from the LV= Income Roulette report last year, the insurer’s latest study has found that more than seven in 10 (73%)[1]of this age group fall short of the Money Advice Service (MAS)[2] recommended amount of savings to be financially resilient, versus a national average of 56% . The research revealed a further one in five (22%) in their early thirties don’t know how long they would be able to cope financially if they found themselves unable to work – for instance, due to illness or an accident. Despite this, fewer than one in twelve working adults (7%) have their own Income Protection insurance in place.

Its deeply concerning that many of those in their early thirties are delaying major life milestones because they feel worried, unconfident and ill prepared financially. And it is worrying that so few of the Peter Pan Generation can withstand the financial effects of an unexpected income shock - they have no Plan A, nor a Plan B.

With low financial confidence and little provision to handle a financial crisis, there is a need and opportunity for advisers to help this generation with their financial planning so they feel more secure. When it comes to the life milestone of buying a new home, advisers are ideally placed to include protection in every mortgage conversation with clients. Using the LV= Risk Reality Calculator is one simple way to transform those conversations by making risk far more personal and real, and helping ensure our Peter Pans do have a back-up plan.

Justin Harper,Head of Policy for Protection at LV=, said:

There are multiple reasons this age group isn’t properly preparing for financial risks. A universal emphasis on the importance of ‘staying young’ means many people are in a state of denial or avoidance when it comes to facing up to the future. We also tend to talk within – rather than across – generational groups, which encourages us to focus inwardly on the present, not the future.

Previously younger generations would likely inherit their parents’ estate while relatively young, but increased life expectancy means this is no longer the case. By not giving proper weight to their financial status, this group could be at risk of finding themselves with a significant level of responsibility without adequate financial preparation or protection.

Dr Lewis,commented:

For more information about using last year’s Income Roulette report with clients, protection conversations and the LV= Risk Reality Calculator, financial advisers can visit the LV Adviser IP hub at LV.com/IP.

Notes to editors

*A 25 year old, non-smoker, retiring at 65 could get £1,000 of cover a month with LV= for just £6.79 a month. Based on a three month waiting period and level cover.

[1] Methodology for consumer survey: YouGov, on behalf of LV=, conducted online interviews with 8,529 UK adults between 20th and 26th June 2018. Data has been weighted to reflect a nationally representative audience.

[2] Methodology for recognised benchmark of financial resilience: Money Advice Service (MAS) guidelines for financial resilience state that ‘people should hold an emergency fund of three months’ income’. LV= identified the ‘least financially resilient’ groups based on the combined factors of how respondents fared against the MAS definition and how confident respondents reported to feel about being able to manage a financial crisis.

People in their early thirties were identified as one of the least financially resilient groups using the following methodology: 30 – 35 year olds were identified as the least financially resilient age group with 73% falling short of having 90 days’ worth of outgoings in the bank against the national average of 33%. Within this age group, 43% lack confidence in handling a financial crisis, versus the national average of 34%.

[3] Dr David Lewis, ‘Life Unlimited – Peak Performance Past Forty’, to be published late 2018

 

About LV=

LV= serves over 5.8 million customers with a range of financial products. We are a leading financial mutual and currently the UK’s joint number one brand for Insurance and Investments, according to the 2016 YouGov Brand Index Buzz Rankings. We offer our services direct to consumers, as well as through IFAs and brokers.