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'Generation Debt' vulnerable to financial shocks

02 August 2017 | Press Release


  • 25-34 year old renters named one of the least financially resilient groups in the UK with two-thirds not having enough in savings
  • More than two in five (44%) of this group aren’t confident in their ability to handle a personal financial crisis
  • Yet less than one in ten (7%) have an income protection policy to fall back on if they lost their income

According to a new study from protection specialist LV=, renters among the late-Millennial generation (25-34 years old) are one of the least financially resilient groups in the UK.

Based on research conducted with over 9,000 people, the first instalment of LV=’s ‘Income Roulette’ research found that more than half (55%) of 25-34 year olds fall short of the Money Advice Service (MAS) recommended amount of savings to be financially resilient. Resilience can be defined as someone who has 90 days’ worth of outgoings in savings, however the research found that a third (34%) of late-Millennials could only survive for one month or less if they lost their income. These figures are even more pronounced for renters of this age, who make up almost half (45%) of the group.

Two-thirds (65%) of 25-34 year olds who rent don’t have the level of savings specified by MAS –almost double the national average (37%) – and 45% could only cope for one month or less without their income. In addition, more than two in five (44%) aren’t confident in their ability to handle a personal financial crisis, again far higher than the UK average (33%).

This group of renters among late-Millennials are particularly struggling with debt, leading to LV= dubbing them ‘Generation Debt’. 43% say they can’t save any money at all with student debt being this group’s biggest obstacle to saving (40%), followed by credit card bills (32%). Half (51%) have some form of unsecured debt and one in five (20%) owe more than £5,000. Further to this, double the national average are in their authorised overdraft (21% vs 11%) and this group are three times more likely to have a loan from friends or family (12% vs 4%).

If they were to lose their main source of income, fewer than one in ten (7%) renting 25-34 year olds have a form of income protection insurance to fall back on and cover their outgoings. The main reasons they gave for not considering income protection were that they think it would be too expensive (50%) or not trusting that it would pay out if they needed to make a claim (22%). However, when cover can be less than £10 a month* and data from the Association of British Insurers showing over nine in ten income protection claims were paid last year, it’s clear there is work to be done to dispel these myths.

LV= has a wealth of tools and content to help advisers in their conversations with clients, including the LV= Risk Reality Calculator which can help advisers demonstrate the chances someone would be out of work for a lengthy period of time. The tool can be found at: https://lv.com/adviser/risk-reality-calculator

For example, the calculator shows a 30 year-old, female, non-smoker who wants to retire at 65 has around a one in two (47%) chance of being unable to work for two months or more in their working life, and a one in ten (13%) chance of suffering a serious illness

Justin Harper, Head of Policy for Protection at LV=, said: “It’s worrying that so many 25-34 year olds have no idea how they would cope in a personal financial crisis, but those who rent are suffering even more. It’s clear that people in ‘Generation Debt’ are at risk of finding themselves struggling to make ends meet if they lost their income.

“With nearly half of older Millennials stuck in the cycle of renting, they’re missing out on the traditional touch-point of considering protection products when buying a home and as a result are more likely to have misconceptions about their real needs, advice and products. It’s vital this generation isn’t overlooked, and industry and Government works together to ensure more people are able to increase their resilience to financial shocks both in the short and long term.”

LV= believes the Government’s new single financial guidance body must have a specific focus on helping build UK financial resilience, including directing people to regulated advice when they would benefit from it.


*A 25 year old, non-smoker, retiring at 65 could get £1,000 of cover a month with LV= for just £6.79 a month. Based on a three month waiting period and level cover.

Methodology for consumer survey: YouGov, on behalf of LV=, conducted online interviews with 9,495 UK adults between 5th and 10th July 2017. Data has been weighted to reflect a nationally representative audience.

Methodology for recognised benchmark of financial resilience: Under Money Advice Service (MAS) guidelines, resilience can be defined by having 90 days’ worth of outgoings in the bank. LV= identified the ‘least financially resilient’ groups based on the combined factors of how respondents fared against the MAS definition and how confident respondents reported to feel about being able to manage a financial crisis.

Late-Millennial renters were identified as one of the least financially resilient groups using the following methodology: 25-34 year olds (Late-Millennials) were identified as the least financially resilient age group with 55% falling short of having 90 days’ worth of outgoings in the bank against the national average of 37%. Within this age group, 65% of renters fall short of the MAS benchmark, and 44% lack confidence in handling a financial crisis, versus the national average of 33%. 43% of this age group are unable to save any money at all – this is 5% higher than the national average of 38%.

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