Young people turning to Bank of Gran and Grandad

The financial impact of Covid-19 across age groups

Adam Saville
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Young people turning to Bank of Gran and Grandad

Research from LV= and Aviva reveals young people most likely to need help or take ‘negative action’

Many of us have heard of the Bank of Mum & Dad, but it appears that the Bank of Gran and Grandad is becoming more prevalent as a result of the ongoing coronavirus pandemic.

Young people (aged 18 to 34) are twice as likely (6% vs 3% of general population) to have taken out a loan and four times as likely to have received financial support from friends than over 35s (8% vs 2% of over 35s), according to findings from the LV= Wealth and Wellbeing Monitor.

The survey of 4,000 UK consumers from September also revealed that those over 65 are less likely to be struggling with their finances (17% compared to 31% of the general population), with this group (11%) more likely than any other age group to have offered financial support to family members who are struggling.

Clive Bolton, managing director of savings and retirement at LV=, said: "Coronavirus has been a huge shock to the UK and our survey of the UK population's financial confidence, health and attitudes to spending, saving and wellbeing reveals just how worried people are about the future.

"Our research indicates how many young people are feeling the financial effects of lockdown more than other groups. Older people - those aged over 65 - are faring relatively better probably because they receive the state pension and are more likely to have a final salary pension, which gives them the financial security to help younger members of their family."

Lockdown 2.0

The findings coincide with research from Aviva that has shown that more than half of Brits (57%) have taken action in relation to their saving in preparation for the November lockdown in England.

The majority of people reviewed their financial situation in the days after the second lockdown was announced for England, it suggested, with some taking positive actions and others making decisions that could adversely impact their future finances.

Around a quarter took the time to check their savings (24%) and actively sought to add more to their savings pot (23%), however it was young adults (aged 25 to 34) that were most likely to reduce their pension contributions during this time (13%) - 10 times more than those older 45 (just 1%).

In fact, the research showed that those over 45 were most likely to do nothing at all (58%) - the age group least likely to seek regulated financial advice during November (4%).

Almost a third of Brits more willing to talk about finances

The Aviva survey of just over 2000 UK adults also revealed that the inability to save was the biggest financial concern for just over a quarter (28%) of them at the start of the second lockdown - increasing to a third (33%) of those aged 45 and over - followed by concern about economic and stock market volatility and the inability to pay household bills.

Alistair McQueen, head of savings and retirement at Aviva, said: "There is little positive to be said about life in lockdown, however one silver lining is that a majority of us have used this time to review our finances. Our next goal is to make this ‘one-off-review' a ‘once-a-year-habit'.

"Growing hope of vaccines may suggest light at the end of the pandemic tunnel. But the financial hangover will take longer to lift. Now is the time to double-down on our money management.

"Aviva has launched a free Mid-Life MOT app to help those aged 45 to 60 assess their wealth, work and wellbeing. This once-a-year MOT gives a score out of 100 and highlights handy resources that can support ongoing control.

"At a time of continuing uncertainty, much may be beyond our direct control, but our personal finances need not be."

Early retirement

The LV= Wealth and Wellbeing Monitor also suggested that just over 10% of more affluent consumers - those with between £100,000 and £500,000 of assets excluding housing - were either taking or considering taking early retirement in three months' time (compared to 4% of general population).

However 40% of those approaching retirement (aged 55-64) said their finances are worse now than three months ago - compared to 31% of those aged 45-54 who said their finances have worsened.

One in four aged 55-64 have seen a fall in income from work. Despite being close to retirement, only 3% of those aged 55-64 are putting any spare money into their pension, instead opting to keep it in their current account (28%) or savings account (28%). 

Clive Bolton added: "It is surprising to see how more affluent people are becoming more interested in early retirement. Early retirement is attractive for many people but it has serious implications for retirement finances. Retiring five years earlier than anticipated, for example, means five years fewer contributions and an additional five years withdrawing money from a pension. Without proper planning it increases the likelihood of running out of money in retirement."

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