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Life Insurance > Love Life > Money > Generation Debt

Posted 02 August 2017

‘Generation Debt’ sapped of savings potential

Two thirds of 'Generation Debt' don't have enough in savings

The first instalment of a new report by LV= entitled ‘Income Roulette’, based on research conducted with over 9,000 people, found that renters among the late-Millennial generation (25-34 years old) are one of the least financially resilient groups in the UK.

  • Two-thirds don’t have enough in savings, with half not confident in their ability to handle a personal financial crisis
  • Four in ten 25-34 year olds who rent are unable to save any money each month

What is financial resilience?

Do you have more than 90’s days’ worth of outgoings in savings? If so, you can be classified as financially resilient.

If not, you join 34% of late-Millennials who could only survive for one month or less if they lost their income, rising to 45% for renters within this age group, which is almost double the national average.

In addition, more than two in five of this group aren’t confident in their ability to handle a personal financial crisis, again far higher than the UK average.

'Generation Debt'

Biggest money-saving obstacles for Generation Debt.

This group of renters among late-Millennials are particularly struggling with debt, leading to LV= dubbing them ‘Generation Debt’, with more than four in ten unable to save any money at all.

Student debt appears to be the biggest obstacle to 'Generation Debt' savings, followed by credit card bills, with one in five owing 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%).

Unexpected income loss

Less than 1 in 10 of 'Generation Debt' has any form of income protection insurance to fall back on should they lose their main source of income

We all hear news of a friend or a relative who:

  • is off work for a few months, or
  • has been diagnosed with a serious illness

So what happens if you lost your income unexpectedly, whether through an accident or illness. Could you afford to continue paying your bills, your rent, and fund your lifestyle?

Less than one in ten of ‘Generation Debt’ has any form of income protection insurance to fall back on should they lose their main source of income. In fact, almost one in four would plunge themselves into further debt by putting even more on their credit cards and 3% even admitted they would turn to a pay day lender to cover their costs.

What’s next?

To tackle this financial insecurity, particularly among the ‘Generation Debt,’ LV= is calling on the Government to ensure that the new Single Financial Guidance Body (SFGB) has a specific remit to focus on increasing financial resilience among consumers, particularly those – such as older Millennials – who need it most.

Justin Harper, head of Policy for Protection at LV=

It’s worrying that so many older Millennials have no idea how they would cope in a personal financial crisis, but those stuck in the cycle of renting are suffering even more. It’s clear that people in this ‘Generation Debt’ are at risk of finding themselves struggling to make ends meet if they lost their income. We want the Government’s new single financial guidance body to have a specific focus on helping build UK financial resilience. It’s vital that more is done to encourage individuals and families to prepare and protect themselves against the consequences of accident, sickness, or disability.

Justin Harper, Head of Policy for Protection at LV=

Are you at risk? Use our Risk Calculator to check.

Despite so few people having an income protection insurance policy, the chances someone would need it are higher than you might think.

Using our new Risk Calculator, the results show that a 30 year-old, female, non-smoker who wants to retire at 65 has a one in four (26%) chance of not being able to work for three months or more in their working life. This increases to around one in two (47%) when looking at the risk of being unable to work for two months or more.

An example of how our calculator breaks down the risks

The Risk Calculator results of a 30 year-old female, non-smoker

To find out what your chances are of being out of work or suffering a serious illness, use our simple Risk Calculator and see for yourself.

Take control of your finances

If you are worried about your finances, we've put together five simple tips to help you take control and build up your financial resilience.

  • 1. Create a budget and try to stick to it: The best place to start is jotting down all your incomings and outgoings. It sounds obvious, but it can help identify any pinch points you could easily cut back on, such as takeaways or shopping. There are a number of apps available now to help you keep track of your finances or you can visit the Money Advice Service website and use the free budget planner.
  • 2. Clear loans or credit cards with savings: If you're just clearing the minimum payment on loans and credit cards despite having cash in the bank, then it’s worth doing the maths to work out what’s actually doing more for you. Your savings could be earning little or no interest, while your payments cost you money in interest.
  • 3. Order your credit report: It pays to stay on top of your personal financial data. Experian and Noddle provide you with your credit score as free service, or you can sign up for a trial with Equifax.
  • 4. Review your insurance cover: It’s easy to think ‘it’ll never happen to me’, but when you’re already in a precarious situation financially losing your main source of income could be catastrophic. Check with your employer if they offer Income Protection and consider speaking to a professional financial adviser about the benefits of private insurance products – some advisers will do this for free and cover can be less than £10 a month*.
  • 5. Use the internet wisely to save big: Comparison sites are one quick way to save money but you can also consider using voucher code websites or buying online through cashback sites like Quidco or Topcashback where you can get money back on purchases.


* 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: Money Advice Service (MAS) guidelines for financial resilience state that ‘people should hold an emergency fund of three months’ income’. 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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