Do you think your generation is better or worse off than people of other ages? Our guest, the Financial Conduct Authority, wants to hear your thoughts.
This is a guest post by Chris Woolard. All views expressed are Chris’s own and not necessarily shared by Which?.
We hear a lot that baby boomers are sitting on property wealth, but also that some are desperately worried about how to pay for care needs in later life.
Meanwhile, we hear that young people are struggling to get on the housing ladder, or alternatively that they should be saving more.
As the regulator charged with looking after peoples’ financial interests, our job at the FCA is to cut through this noise. We want to understand people’s real experiences of money and financial services.
That’s why we launched our Financial Lives survey to look at how people across the UK use their money. This told us, for example, that the State Pension is the main source of income for 49% of over 65s, and that 18-24 years olds are the age group least satisfied with their financial circumstances.
That’s why we’re launching a discussion on what different generations need from financial services.
Varying levels of wealth
Our research suggests that the familiar tale of young vs old doesn’t tell the full story. Levels of wealth vary considerably between generations, but people of all ages have money challenges.
Many baby boomers have benefited from rising property prices and defined benefit pensions. But they still face challenges in planning for when they’re no longer working.
People have more choice than ever before about how to use their pension savings, but this freedom means making more complicated decisions. And many worry about how to pay for later-life care: in some cases, 15 months in a care home could cost more than £50,000.
In reality, very few people will be hit by charges this high – but it’s hard to predict who will and who won’t have to pay, which can be a real source of uncertainty and anxiety.
Meanwhile, millennials are struggling to build up their wealth. Rising house prices, insecure employment and higher student debt all have an impact. Some of this group will inherit money from their parents or grandparents which might help with a house deposit or, later, their savings.
But the fact remains that for many, house ownership still feels out of reach. In 1993, a first-time buyer in the UK could expect to pay 2.4 times their average salary. In 2018, it’s more than 5 times their average salary – and almost 10 times in London.
When we talk about baby boomers and millennials, we often forget the middle generation. Many people from “Generation X” have also benefited from rising house prices – but they have low levels of savings and high levels of debt.
They struggle to put aside money for their pension, or even for short term emergencies. For example, our analysis showed that the total wealth of someone aged 40 to 50 in 2016 was approximately £28,000 lower than those of the same age 10 years earlier. This means they can be ill-equipped to cope with sudden financial shocks, such as a job loss.
Whichever generation you’re from, we want to know how you feel about money. What works for you, and what doesn’t.
What’s concerning you, your parents, and your children? Do you have the right financial products for your needs? Could firms be doing more? Your answers will help inform how we regulate financial services in the future.
So tell us your views below – we’re listening to you today to decide what we do tomorrow.
This was a guest post by Chris Woolard. All views expressed were Chris’s own and not necessarily shared by Which?.