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News release
Friday 7 March 2008
TISWAS GENERATION FACING BLEAK FINANCIAL FUTURE
They may have been brought up during a golden age of children’s television, but the gaping financial black holes of the TISWAS Generation – ThIrty Somethings Without Any Savings – mean many will have to work into their 70s or hope they start earning six-figure salaries just to get by.
New research from Skipton Building Society reveals that Britons aged 35 or younger will need to start earning £320,000 a year if they are to retire at their hoped-for age of 63 on their current average salary of £27,700. Failing that, they will need to either scrape through retirement on £271 a month – or work until they're 7611.
Despite looking to retire at 63, more than half of under 35s (53%) contribute nothing to a pension, and even a quarter of those who do (24%) contribute just £50 or less. 58% know they should save for the future but claim they simply cannot afford to do so, with two fifths (40%) admitting that they struggle financially.
And the research reveals just how difficult the under 35s are finding it to make ends meet. Although they earn healthy salaries, a fifth (18%) spend more than they take home each month, with a further two fifths (46%) having less than £100 left over at the end of the month.
The TISWAS Generation’s single biggest outgoing after rent and mortgage payments is on servicing debt; credit card bills and loan repayments account for an average of £206 a month – twice the amount of £100 per month spent on socialising – with more than one in 10 (12%) paying more than £500.
Three quarters of Britons aged under 35 (74%) are in debt of some kind, with the average amount owed more than £9,000 and one in 10 of those in debt (12%) owing in excess of £20,000.
And this is only the edge of the TISWAS Generation’s financial black hole. With so many spending so much paying for yesterday, saving for tomorrow is rare. 48% have less than £1,000 squirreled away, while one in five (22%) have no savings whatsoever.
To make ends meet, many of the TISWAS Generation are risking financial meltdown, delaying paying bills (18%), debt repayments (15%) or rent or mortgage instalments (10%). Others have gone even deeper into debt, turning to friends and family (33%) or the bank (16%) for loans.
For some, financial hardship has even led to real physical hardship, as 20% have been forced to not eat properly and 19% to take on more than one job.
Despite this, many of the TISWAS Generation are still burying their heads in the sand when it comes to their finances. Nearly a quarter (23%) plan to ask mum and dad for help with a deposit for a house, with a similar proportion (22%) relying on money being left to them in their parents’ or other relatives’ wills to help with their pensions or savings.
And in a last ditch effort to get by, 28% have even tried to win themselves out of debt by playing the lottery, one in 10 (12%) confident that a future win will be the solution to their financial woes.
But there is some good news. Those who can afford to save are approaching it seriously, putting away an average of £181.52 a month, with one in five savers (19%) having more than £10,000 set aside for their futures.
Jennifer Holloway, head of media relations at Skipton Building Society, added, "Perhaps the frivolity that was at the heart of the TISWAS TV show rubbed off on its viewers, if our research into their attitudes to money is anything to go by. But it’s definitely time for a wake up call - especially when our figures show today’s under 35s will either need to work much, much longer or earn much, much more to be able to retire when and how they want to.
“However, the good news is that those who have taken a more serious look at their money (perhaps viewers of the more sedate Swap Shop) are doing well, with one in seven savers having more than £10,000. And even though it may seem daunting, it could be easy for those in the red to join those in the black. The first step is to work out exactly how much money is coming in and going out each month and Skipton’s budget calculator at www.skipton.co.uk can help with that.
“Then, when you’ve spotted where a few sacrifices can be made – perhaps by going out a little less or buying fewer CDs – it’s a good idea to open a regular savings account. By setting up a standing order so that the cash is transferred from your bank account as soon as you're paid, you won't even notice it's gone. And for those who might be tempted to dip into their savings for the odd spending spree, an account with limited access would be a good choice, like Skipton's Special Saver where you can't touch your money for the first 12 months."
For further information, please contact:
Michael Sheen, Band & Brown Communications, 020 7419 8616 or michael@bbpr.com
Colleen Brayshaw, Band & Brown Communications, 020 7419 6959 or colleen@bbpr.com
Editors’ notes
- Outgoings each month
Mortgage or rent payments: £632 or £372
Paying off credit cards/servicing debt repayments: £206
Groceries: £172
Household bills: £161
Savings: £115
Transport: £109
Socialising: £101
Holidays: £65
Pension: £63
Insurance: £63
Clothes: £55
Disposable goods: £34
Gym/wellbeing: £17
- Most common types of debt
Credit cards: 50%
Student loans: 33%
A bank loan: 28%
Store card: 12%
A loan from parents: 12%
A loan from other relatives: 4%
- Calculation based on 26-year-old (the median point of the 18 - 35 cohort) looking to retire on the mean £27,753 salary at the age of 63 (the average age at which 18 - 35-year-olds want to retire), living on their pension until 78 (average life expectancy in GB - ONS), contributing £63 a month (mean contribution).
Based on current contributions, this will leave a £182,355.70 pension pot. Taking into account inflation, this will last 19 months at the desired monthly pension amount, or leave the equivalent of £270.77 a month in today’s money for the full retirement period (12% of the current monthly income).
In order to achieve the desired quality of life in retirement, contributions of £718 a month would be needed. Based on the current average rate of contribution (£63 a month on a monthly salary of £2,312.75, or 2.7%), that would require an annual salary of £319,111.11 (718 / 2.7 x 100 = £29,777.77 a month or £317,111.11 a year).
- All figures, unless otherwise stated, are from PCP Market Research. Total sample size was 1,207 adults aged 18 - 35. Fieldwork was undertaken in February 2008. The survey was carried out online.
- Skipton is the UK’s sixth largest building society, with a national presence represented by its 82 branches, covering the country from Aberdeen to Plymouth. It heads the Skipton Building Society Group, whose subsidiary companies have significant interests in estate agency and related businesses (through the Connells and Sequence groups), third party mortgage servicing (Homeloan Management), credit referencing (Callcredit) and market data supply, independent financial and related advisory businesses and support services to the mutual sector.