All work and no play; how work has changed for 30 year olds.

There has been a lot of talk in the finance media about young working people and how hard up they are. Especially when compared to older employees that is those born in, or before, the 1970s. Now, if you got up on a school morning (aged 12) to do a paper round, or left school at 14 to start an apprenticeship you may think that this is complete poppycock. But here are the numbers which; do shed some sensible light on the whole debate.

Is it harder to earn if you are 15-30 years’ old?

According to the Institute of Fiscal Studies those born in the 1980’s are the first post-war group to experience lower incomes than those born in preceding decades. In addition this group has lived through four global recessions 1990-93, 1998, 2001-2002 and 2008.

Furthermore what is typical of the global recessions is that they have all impacted house prices, and therefore homeownership, in the developed world. Their second impact has been on global markets, particularly commodities markets meaning that the return on work, state and private pension savings have suffered. Those born in the early 1980’s have an average individual wealth of £27,000; whereas those born ten years earlier have on average, almost twice the individual wealth at £53,000. The third impact of the global recessions has been a stagnation of working-age incomes; where pay and employment of young adults has been the first business cost to be reduced. The Association of Graduate Recruiters (AGR) recently surveyed 200 top UK graduate employers who have reduced graduate vacancies by 8% September 2016, as compared to September 2015.

Around 20% of the UK’s 65.2 million population is aged 15-29 years’ old, making them today’s young employees. They are better educated, healthier and richer than their predecessors. However, education, beyond state primary and secondary school, has become so expensive that most post-graduates are left with debts of £30,000 or more. It is not surprising that a reliance on the ‘bank of mum and dad’ (finance advisors call this: Living Inheritance Planning) has evolved in the UK. And the ‘bank of mum and dad’ is set to become entrenched when we factor rising house prices into the search for higher incomes.

In the knowledge economy it pays to work in the city. Over 50% of the world’s people live in cities and by 2050 the UN predict that that figure will rise to 66%. In London, where house prices are the highest globally, 25% of the population are aged 25-34 years’ old, whereas across the rest of England they account for 12% of the population. Gathering in cities is not just about chasing high incomes; young well-educated people are bound to want to mix with other like-minded young singles. Though many singles delay starting a family, instead taking further study whilst in their 20s and 30s, so as to enhance their career prospects.

We would advise our ‘bright young thing’ readers to consult their Independent Financial Advisor (IFA) about finance planning, particularly in light of lower returns on pension savings investments and rising house prices.

For ‘bank of mum and dad’ or ‘bank of grandma and grandad’ readers we would advise that you consult your IFA about finance planning. You might like to consider asking about Living Inheritance Planning, equity release and Individual Savings Accounts (ISAs).

Contact MarchwoodIFA for friendly expert advice on pensions, mortgages, equity release, Living Inheritance Planning and ISAs.