Life milestones delayed for Peter Pan generation
When we think of a typical life, several important financial milestones come to mind.
Getting married, buying a home, having children. All of these are big steps in life and can have significant financial implications.
But with the increasingly expensive cost of living and buying a home, many people are delaying these milestones until later in life.
New research from insurer LV= shows that people in their early thirties are putting off the big life milestones, as a result of being in one of the least financially resilient groups in the UK.
They found that 24% of 30-35 year olds surveyed feel worried about the financial impact of big milestones in life, including starting a family or buying a home. This is double the national average, showing that younger people are allowing their financial vulnerabilities to delay big life decisions.
With an estimated 4.7 million people in the UK in this age range, it’s a particularly important issue to address.
The study found that nearly one in six people in their early thirties had delayed major life milestones because they don’t feel financially mature enough.
To carry out the research, LV= worked with Dr David Lewis, an associate fellow of the British Psychological Society, who has identified this group as the ‘Peter Pan Generation’.
Separate research carried out by Dr Lewis found that 70% of those under 35s believe their youthfulness will last forever, so they don’t properly prepare for risks the future may hold.
Dr Lewis commented:
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.
A major challenge for this age group is a lack of financial resilience.
When faced with a short-term financial emergency, a high proportion of those in their thirties simply don’t have the cash emergency fund or income protection needed to deal with the issue.
As a result, they fall into expensive, unsecured debt to handle unexpected financial emergencies.
Looking at the recommended amount of cash savings needed to be financially resilient, earlier research from LV= found that 73% of this age group fall short, compared with a national average of 56%.
Whilst we have a problem across all age groups when it comes to financial resilience, it’s especially acute for younger people and those in their early thirties.
The research found a further one in five 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.
These are financial scenarios where income protection insurance can be invaluable, yet relatively few have this important form of insurance in place.
Fewer than one in twelve working adults (7%) have their own income protection insurance in place, according to the insurer.
Justin Harper, Head of Policy for Protection at LV=, said:
It’s 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.
If a lack of financial resilience is causing you to delay major life milestones, then speaking with a financial planner could be the solution.
Do get in touch to find out how we can help improve your financial resilience, setting you free to achieve all you want in life.