The Savings Squeeze: Young people locked out from the benefits of saving

This report uses data from the Wealth & Assets Survey in order to look at the reasons behind the inability for young people to be able to save. Key findings:

Young people would like to invest and save in property, but over the last decade the proportion of young people with zero property wealth has increased from 35% to over 40%.
Young people’s high cost of living and stagnating real earnings are the main reasons it is increasingly difficult for young people to save.
The proportion of owner-occupiers and landlords who are young people continues to decline, while a record-high number of young adults now stay on to live with their parents in their late 20s, indicating the financial pressures they face.
Although young people report feeling more confident that they will have a good standard of living upon retirement than they felt a decade ago, overall levels of saving have not increased.
Auto-enrolment has led to a welcome increase in the amount of young people with some pension wealth, but the median pension wealth of all individuals aged 16–24 remains zero. Since auto-enrolment, the median pension wealth of the 25–34 cohort has increased from £0 to £3,000, while the median pension wealth of all cohorts aged 45 and above has doubled, tripled, or even quadrupled.
Median pension wealth held by young people with some pension wealth has decreased by approximately a quarter over the past decade.
Only 6% of those aged 25–34 who are self-employed participate in a pension scheme.
Of those aged 16–34 who are employed, only 65% have enough savings to be able to withstand a three-month-long 25% loss of income, and just over half of those aged 16–34 who are self-employed could withstand the same loss of income.
Young people do not have access to the same generous defined benefit pension schemes, such as final salary schemes, enjoyed by previous generations.
Low levels of discretionary spending, property ownership and pension wealth indicate an insecure future for young people without adequate policy intervention.
Governments have provided age-related savings’ schemes in the past with high-yielding “Granny Bonds”. Similar schemes, along with subsidised savings accounts for young people from low-income families, should be offered to the young in conjunction with free financial advice services.