“The economic fallout from the Coronavirus is being felt across all generations, but the latest analysis from the FCA highlights the financial dynamics faced by Baby Boomers, Generation X, Millennials and Generation Z. The varying wealth profiles and financial challenges, tips the balance of intergenerational fairness as we see a widening of the gap between generations.
“It’s essential that Government policies address the needs of each generation and help deliver better balance between them. This is particularly important in areas such as pensions, social care and housing, where the financial services industry has a key role to play in supporting individuals with their financial planning. As our population ages, attitudes towards retirement are already becoming more flexible, and Covid19 ramifications will only accelerate this. Even before the coronavirus crisis there was a sharp increase in people wanting to transition into retirement and for many baby boomers, this may now be even more important. Similarly, the financial challenges of funding social care will continue to grow, making this a priority.
“The report also highlights key differences between individuals within generational classifications so it’s vital not to over simplify the implications. It’s clear that younger generations have been particularly adversely affected by furlough and job losses and tend to have lowest financial resilience, but they are also the generations with more time on their side to recover.
“One of the stark realities of the crisis is the real lack of financial resilience, with a quarter of millennials having low financial resilience and Gen-X not faring much better at 23%. But even 13% of baby boomers have low financial resilience so it’s important not to generalise. The pandemic is bringing into sharp focus the benefits of having a financial cushion. And in these uncertain times, there’s also a greater need for better access to financial advice and guidance.”
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