18 to 35 year olds under
THE Pensions and Lifetime Savings
Association (PLSA) released research showing 18 to 35 year olds' plans to save
for the long term are curbed by short term necessity.
This group is often described as the YOLO (you only live once) generation but
our research reveals quite a different profile. Instead of adopting spendthrift
attitudes 18 to 35 year olds want to save, feel they ought to save, but simply
51% of respondents tell us they get more satisfaction from saving money than
spending it and 53% disagree with the idea that they tend to live for today and
let tomorrow look after itself. When it comes to debt, the majority (57%) say
they do not have any (excluding student loans) and 65% of 18 to 35 year olds do not
acquire any debt on a monthly basis.
Joanne Segars, Chief Executive, Pensions and Lifetime Savings Association,
commented:- "18 to 35 year olds are no different to many people; they want
to save for a secure future, but short term financial pressures get in the way.
And it's not surprising that without help this group prioritises short term over
long term saving given the current rock bottom interest rates and low wage
Our research suggests many 18 to 35 year olds shy away from the sort of investments
that give better returns over the long term, but it also suggests that where a
financial decision or situation becomes a fact of life, for example student
loans, this group quickly accepts it and adapts. We've seen this behaviour in
workplace pensions with a very low opt out rate from automatic enrolment of just
7% by those aged under 35.
Those younger savers staying in their workplace pensions are smart. Automatic
enrolment provides them with a hassle free way to save for the long term; they
don't have to think about the investment strategy, or choosing the product, or
moving their money, they just have to keep saving. Their own contributions are
doubled by contributions from their employer and Tax Relief from the government;
and they have time on their side; early savings benefit from compound interest,
investment growth and time to recoup any losses. The good news is a workplace
pension is coming to every work place by 2018."
► Money in, money out...
Asked what prevents them from saving, 48% say the cost of living is too high and
43% say their salary is too low. One in five tell us they feel their lifestyle
stops them saving, but this is topped by 30% who say the cost of their rent or
mortgage stops them saving.
► Good intentions...
77% tell us that over the last 6 months they felt the same or increased pressure
to save for the future; only 6% tell us they felt the pressure had decreased.
Some 18 to 35 year olds are managing to save but typically for the short term: 34%
are saving for a rainy day and 32% say they are saving for a 1 off purchase
such as a holiday, car or TV.
► Property preferred...
Given an unlimited sum of money 42% tell us they would prefer to invest in
property to get the best return; either buying their own home or investing in
additional property. There is comparably little interest in ISAs, or investing
directly in the stock market. However, faced with the reality of what they
actually have available to save 18 to 35 year olds give quite different answers
with 41% opting for a savings account and 26% choosing a cash ISA.
► They're student loans not debts... 54% of those who have an outstanding student loan tell us they don't consider it
as a debt and 26% say student loan repayments prevent them from saving each
month; suggesting student loans have simply become a fact of life for this
► Cautious savers... 47% tell us that the interest rate offered is an important factor when choosing
between saving products and 30% want to be able to access their money at any
time with no fees. 24% say that the financial risk associated with the product
is important when choosing between financial products.
► Locked out of the long term... 58% of 18
to 35 year olds agree with the statement that saving products are
designed for people who already have money. The survey paints a picture of a
cohort of savers who want to save for the long-term, but the reality of the cost
of living, low salary levels and housing costs mean it is difficult for them to
When they do save it seems they feel they cannot afford to take risks with their
savings and opt for the less risky, low interest options; despite appearing to
have an appetite for better returns, telling us they value a good interest rate
when choosing a saving product.