A large swath of British millennials have little or no savings whatsoever, according the UK’s Financial Conduct Authority’s (FCA) recently released Financial Lives Survey 2017.
The sweeping, nearly 200-page survey is the largest tracking study ever commissioned by the FCA, with the ambitious goal of estimating the number of UK adults holding any one of 70 products, profiling those who do and do not hold these products, and observing their financial behavior and experiences. It also aims to demonstrate the differences in behavior and experiences by sector, and identify and quantify harm or potential harm
According to the survey, 13% of UK adults have no cash savings at all, while 24% have saved less than £1,000 ($1,300) in total, and 19% have savings between £1,000 and £5,000. Millennials were among the most cash-strapped, the FCA said.
“Most 25- to 34-year-olds have relatively little in the way of savings, and what savings they do have are predominately in cash rather than equity‑based investments,” said the report. And only 16% of millennials who are saving their money are doing so for longer‑term objectives, such as to provide an income for retirement, compared to 35% of all UK savers.
“With limited time to build up, cash saving levels for 25‑to 34-year-olds are relatively low,” said the report. “One in five (19%) 25‑to 34-year-olds have no cash savings whatsoever, and a further 30% have cash savings of less than £1,000.”
The mean amount of cash savings held by 25‑ to 34-year-olds is £11,000, which is less than half the £25,000 for the average UK adult. Additionally, 85% the group has zero investments. As a result, the mean investment amount held by 25‑to 34-year-olds is just £2,000, less than one-fifth over the average for all adults in the UK, which is £11,000.
However, the survey found that workplace benefits are driving pension take‑up as millennials settle into employment and their careers. “There are signs that auto‑enrollment into workplace pensions is having a successful impact,” said the report.
Almost half (48%) of 25‑ to 34-year-olds now hold a defined contribution pension, while 14% have a defined benefit pension, and 97% of pension holders currently making contributions arranged these pensions through an employer. At the same time, their pension pot sizes are not very large. Just over half of those surveyed said they have a pension pot of less than £10,000.