Contrary to views that young people often rely on the ‘bank of mum and dad’, a new survey shows that 33.2% of 18-35 year old employees receive no financial support from their parents or family. In fact, 26.6% of young people expect to have to provide financial support to their parents later in life, swapping roles to ‘bank of son or daughter’. These are the key findings from over 1200 respondents in an independent survey from Smarterly, ‘Realigning workplace savings to meet the needs of millennials’.
Steve Watson, head of proposition at Smarterly, says: “We’re in a sad situation where over a quarter of millennials have added ‘Mum and Dad’s finances’ to the list of their own money worries. While the survey shows that over a quarter of young people think about parent’s future money, fewer than a tenth of young people (9.27%) see their own retirement funds as the biggest financial concern.
“Younger peoples’ financial worries are very different from those of older generations – rocketing housing prices, low pay and a culture that normalises getting by on credit are all pressing. Quite naturally, there are a lot of hurdles and opportunities for most young people before even thinking about their own retirement. It seems now, though, that finding additional funds for parents’ old age could also become a financial ticking time bomb for many. It says so much about savings and pensions in the UK.”
The new findings from Smarterly, which helps employees build healthy savings habits, show that workplace financial support continues to focus on pensions and pensions guidance, which is not a priority for 18-35 year olds. They would welcome more support on making savings for the short to medium term.
Watson adds: “People – young and old – need to be supported throughout their working lives by workplace savings, not just pensions. In isolation, pensions are no longer enough to support financial wellbeing. Although retirement is still a final destination, there are many other stops along the way. The key is for people to shift to accessible savings that can be used for all events during their lives. Employers are a first port of call to help them do this.”
Michael Johnson, Research Fellow for the Centre for Policy Studies and Corporate Affairs and Policy Adviser to Smarterly, adds: “We need to tackle intergenerational inequity at its roots. Millennials are having to support an increasingly ageing population by funding the rising cost of health and social care, in addition to a panoply of pensioner benefits. Today there are 3.5 people of working-age for every pensioner; this is expected to fall to 2.5 by 2036.
“Consequently, many millennials are likely to experience a lesser quality of life than that of their parents. The traditional savings vehicles, including pension pots, no longer serve their needs. They require access to much more flexible, innovative savings schemes.”
The independent research takes into consideration views from 1248 employees and 508 HR professionals in UK businesses.