Pensions  

A family affair

This article is part of
Guide to Family Financial Planning

The FCA’s paper indicates that young people are more likely to be working part-time; in temporary employment, or on a zero-hours contract than older workers.

Talking about my generation

Reflecting on the financial changes affecting millennials, Ian Dyall, head of estate planning at Tilney Group says:  “The younger generation has been particularly hard hit, as many are carrying student debt and trying to save for a deposit on property at the same time, which is particularly challenging for those living in London. They also don’t have the same retirement benefits as previous generations, such as final salary schemes.”

He adds: “It also remains to be seen whether this generation will benefit from the same level of growth in property values as previous generations. You could say that they have more problems than other generations.”

But the generation in the middle, often referred to as Generation X also has its struggles, being buffeted by financial challenges from both sides, as they try to help their parents with social-care needs and also give their children a good start in life.

Mr Dyall agrees that these are tough times for this group too, as he explains: “The middle generation has the extra burden of having to support their children financially at a time when they need to be saving for retirement.

"Also, their income has been squeezed since 2008; it has not kept pace with inflation.”

This means that the middle generation often cannot tend to their own financial needs, whether saving for retirement, or ensuring they have an emergency fund. They may also feel they have to use the Pension Freedoms to access pension savings, to support everyone but themselves.

The outcome is that they are vulnerable to financial shocks, as William Hunter, director, Hunter Wealth Management in Edinburgh warns: “The Bank of Mum and Dad is the world we live in now and some people are making poor decisions about their own future for the sake of their children. They are leaving themselves short of capital and have fewer opportunities to generate income from that capital – forever, because they have given it all away.”

Every generation is vulnerable to the financial changes of the last decades and the impact on their financial needs. It could therefore be an opportune time, as Mr Woolard suggests: “…to step back, consider and understand how these needs are evolving, and challenge assumptions about consumer needs in the context of different intergenerational factors.”

Fiona Nicolson is a freelance journalist