Rent, debts and pensions: Financial issues in your 20s
Published: 15th Jun 2012 00:04:34
On Father's Day this Sunday, sons and daughters across the UK will be thanking their dads for all their support over the last year.
A raft of reports and statistics over recent days suggest that they have much to be grateful for.
More and more twenty-somethings continue to live with their parents, and others require help to raise money to buy a home. The financial pressures of families are leading some parents to continue to work beyond state pension age.
But rather than simply sponging off their parents, data suggests these are tough times for young adults to set out on their own.
Charlotte Davis, a 28-year-old professional working in the charity sector in London, recently told the BBC that rent rises had led her to move home every year since 2008.
"I can't even think of saving a deposit for a flat, it is so unattainable for me or my friends. Young people are getting frustrated because we are so vulnerable."
In the capital, the cost of renting has risen by 4.5% in the past year to an average of £1,032 per month, according to LSL Property Services.
This rise has left rents 46% higher in London than the national average, even though costs have been rising in the rest of the UK as well.
The LSL survey also suggested that the level of arrears among tenants had worsened, with nearly 10% of all rents late or in arrears.
Such rising costs and financial difficulties have been a factor in the increase in stay-at-home youngsters.
A striking official statistic revealed that between 1997 and 2011, the number of 20- to 34-year-olds living with one or both of their parents had risen by 20%. This had happened despite population levels in this age group remaining static.
One in four men and one in seven women in this age bracket lived with their parents last year - a total of three million young people.
A report published on Wednesday by the Joseph Rowntree Foundation suggested that parents ought to keep setting places at the dinner table for their children for some time to come.
Despite concern for their own financial future, parents continue to stump up a contribution or welcome their children back to the nest”
It predicts that the number of 18- to 30-year-olds unable to afford to leave their parents' home will rise to 3.7 million by 2020.
"In 2020, young people will be further marginalised within a badly functioning housing system," the charity's report says.
The authors suggested that rental costs would rise. This will make it increasingly difficult for youngsters - some of whom will be saddled with student debts already - to save for a deposit to buy a home.
For some, that will mean an application for an interest-free loan from the "Bank of Mum and Dad", according to research by one of the UK's largest mortgage lenders, the Halifax.
Its survey suggested that a third of parents had made a financial contribution to help their children get on the property ladder.
As choosy lenders ask for bigger deposits, so the amount parents are lending has risen, the survey claims.
The Halifax estimated that the financial input from parents had risen by 31% in the last five years to £12,846.
"Despite concern for their own financial future, parents continue to stump up a contribution or welcome their children back to the nest to allow them to save," says Stephen Noakes, mortgage director at the Halifax.
All of this comes as youth unemployment - that is jobless 16- to 24-year-olds - stands at more than a million in the UK.
Those who have found a job can take steps to ease the financial burden for themselves and their parents, according to the Money Advice Service.
The service, funded by the financial services industry, suggests:
This final point is already an issue for those approaching retirement now, especially the self-employed. Figures from the Office for National Statistics show that the number of people working beyond state pension age has almost doubled since 1993.
"Having more older people in the workforce will increasingly become the norm," says Darren Philp, policy director for the National Association of Pension Funds (NAPF).
"The problem comes when people want to retire but end up stuck at work because they cannot afford to leave. With half the workforce not saving into a pension, this is going to become a painful reality for millions.
"It is vital that we get more people planning and saving for their old age, and that they start as early as possible."
Today's young people already know that they will have to work for longer. The state pension age will rise to 66 for men and women by 2020, and then to 67 by 2028.
They are more likely to live for longer. But the question that many young people will be asking is whether they will be anywhere near as well off during that life, and that retirement, as their parents.
At 23:35:48 in WorldA young girl offered US First Lady Michelle Obama her father's CV during questions at the White House's Take Our Daughters and Sons to Work Day.
At 23:12:26 in SportFormula 1 boss Bernie Ecclestone made his first appearance in a Munich court on Thursday, accused of giving a £27.5m ($45m, 33m euros) bribe to a German banker.
At 22:51:02 in EntertainmentA village museum in East Sussex will go up against Tate Britain and the new £35m Mary Rose Museum in a contest to be named the UK's museum of the year.
At 22:42:55 in BusinessBarclays agreed to a $280m (£167m) settlement with the US Federal Housing and Finance Authority (FHFA).
At 22:30:17 in EnglandThe government says it is making "urgent inquiries" into reports Whitehall computers were used to make insulting comments about the Hillsborough disaster.
At 22:22:33 in HeadlinesRussia and the US have accused each other of failing to de-escalate the crisis in Ukraine after Kiev launched raids on pro-Moscow separatists.
At 22:19:49 in SportWorld number one Rafael Nadal booked his place in the quarter-finals of the Barcelona Open with a 6-3 6-3 win over Croatian Ivan Dodig.
At 22:13:15 in SportFormer Rangers, Hearts and Scotland defender Sandy Jardine has died at the age of 65.
At 22:00:20 in PoliticsThe zero-hours contract - alongside the payday loan and the bad bank - has gained a kind of totemic significance in the public imagination.
At 22:00:03 in ScotlandScottish independence would leave working people north and south of the border worse off, Ed Miliband has claimed.
Harvard CitationBBC News, 2012. Rent, debts and pensions: Financial issues in your 20s [Online] (Updated 15th Jun 2012)
Available at: http://www.ukwirednews.com/news/1434765/Rent-debts-and-pensions-Financial-issues-in-your-20s [Accessed 25th Apr 2014]
News In Other Categories
Ten candidates will be vying for three European parliament seats in Northern Ireland, it has been confirmed.
A young girl offered US First Lady Michelle Obama her father's CV during questions at the White House's Take Our Daughters and Sons to Work Day.
Skin grown in the laboratory can replace animals in drug and cosmetics testing, UK scientists say.
With the doors to its brand new £1million training centre officially open, one of the UK's leading apprentice training providers, Bristol based S&B Automotive Academy, is showcasing its world-class facilities by launching a series of foreign student exchanges for the first time in its 41-year history. To get a flavour of what life is like as an apprentice in the UK, the Academy hosted 16 apprentice engineers and bus drivers from the G9 Automotive College in Hamburg, Germany, as part of a Europe-wide vocational training initiative called the ‘Leonardo Programme’ with support from the European Social Fund. In a reciprocal arrangement, S&B will be sending nine apprentices to Germany during February 2012 so that they can get an appreciation of life in the automotive industry on the Continent. A further three German exchange groups are being planned for next year. Designed to assist the development of vocational skills and training across Europe, including work placements for trainees, the Leonardo Programme has a budget of €1.75bn, which is helping to encourage UK organisations to work with their counterparts abroad. In what is expected to be another challenging year for employers in the UK automotive sector, S&B’s Chief Executive, Jon Winter, claims that the exchange initiative will bring many benefits to the Academy and its apprentices: “In a world of global automotive brands, it’s important for our learners to understand the international context of the industry they have chosen to make their career. This new exchange programme will enable apprentices and Academy staff alike to achieve a better understanding of the challenges and opportunities within the automotive arena in Europe. With the Academy’s influence also extending to the USA and Asia, there’s every possibility that this initiative could move further afield in the future.” Continued Winter: “The need for skilled technicians across the world is on the increase and we actively encourage our apprentices to look at broader horizons during their training. Many of them have already learned the phrase ‘Vorsprung durch Gelehrtheit’, quite simply, ‘Advancement through learning.” In the 2010/11 academic year, S&B doubled the number of successful Apprenticeships over the previous year with some 350 apprentices graduating from the Academy. At the same time, achievement levels reached an all-time high with an overall success rate of 85%. For those learners on the Advanced Apprenticeship three-year programme, success rates were even higher, at over 98%. PHOTO CAPTION: As part of their exchange visit, S&B Automotive Academy arranged for the German apprentices to visit Hampshire bus operator, Bluestar, at its Barton Park depot. The students are pictured with S&B’s Andy West (3rd right) and Steve Prewett, Bluestar’s Area Engineering Manager (2nd right). Ends http://www.sandbaa.com