Squeezed-middle ages getting squeezed further

Britain’s “squeezed middle ages” need an additional 32 per cent of their income in order to feel financially secure as the economic climate continues to take its toll.

Those aged between 35 and 44 years say they need an extra £612 a month – the highest of any other age group and up from £596 (4 per cent) in Spring 2012. They are also the group most worried (32 per cent) about affording the cost of main household bills, like heating, water and council tax, followed by 28 per cent of those aged 45-54.

Feeling the most financial strain
The results come from the second Aviva Times of our Lives Report [1], published on 25 October, which details the worries, wealth and goals of UK adults. It reveals that while the “squeezed middle ages” (35-54) are feeling the most financial strain, everyone is feeling the pinch – only the over 65s don’t require a significant monthly increase in income – just £23 a month.

Difficult economic climate
Overall the income gap across all ages is £466 a month, which is a rise of 13 per cent (£55) from the £411 revealed in Aviva’s first report in spring this year. This shows the extent to which people are feeling financially squeezed as they struggle to cope with inflation and the difficult economic climate.

As well as affording the main household bills, costs of everyday items like food and clothing (22 per cent of 35-44 year olds) and unexpected costs like boiler repairs and car breakdowns (20 per cent) are also major worries for the middle age groups.

Longer term financial stability
Simon Warsop, business development director at Aviva, comments: “In the past six months Britain’s “squeezed middle ages” – have become ever more pressured and it is interesting to note that the immediate high costs of living like paying for heating and council tax bills are a greater worry than longer term financial stability like savings and pension provision.

“For the middle age group of 35 to 44 years responsibilities are mounting, they are more likely to have the additional costs of running their own home and bringing up a young family, resulting in a need for the most additional income, over £600 a month extra, to feel financially secure.”

Can’t do without
Although people are struggling financially, there are still things they can’t do without. Cars and home insurance top the list with 38 per cent and 36 per cent respectively saying they’re the last things they would give up.

According to Aviva data [2] the 45-54 years olds have, on average, £35,000 worth of possessions to protect which might explain the importance placed on ensuring those belongings are properly protected should the worst happen.

Mobile phones and holidays are the next items that people wouldn’t want to give up (29 per cent would give them up last), with the dependence on mobile phones decreasing steadily through the ages – only 12 per cent of over 65s would not give them up compared with 56 per cent of 18-24s.

Reflection of the digital age
And when it comes to possessions, electrical items continue to rule, with 51 per cent of Brits saying they’re most important – ahead of jewellery and photographs at 46 per cent. This is a strong reflection of the digital age we live in and the importance electrical items have in our every day life.

However, even though their possessions are important to them, the report shows that Britons are significantly underestimating the value of their belongings – by over £10,000 on average. The biggest “insurance gap” is among the 35-44 year olds who value their possessions at £17,178 when, in reality, the average is around £32,000. It’s likely people aren’t considering items like carpets, white goods and furnishings when thinking about what they own.

The research shows that home insurance cover is the second least likely item that people across all ages would give up, but it is clear that there is a disparity between what people think they have and what our data shows the average person actually owns. So it’s important that people choose the right cover to suit their needs to ensure that everything they have worked hard for over the years is properly protected.

Health, wealth and family
As people’s lives progress, their worries change as they get older. Health is an area of concern throughout life but it significantly rises through the ages. 20 per cent of 18-24 year olds are worried about their health, rising steadily to 50 per cent of over 65s.

And when it comes to goals in life, there are certain things that are consistent across the age groups. Everyone rates a happy family and personal life as one of their top three goals, with it number one for all those aged over 35. But the younger age groups are showing more determination than they were six months ago to achieve career goals and start saving regularly – both rank above a happy family life for the 18-24 year olds.

The most self-confidence
Meanwhile the middle age groups say saving regularly, paying off debts and reducing their mortgage are key parts of their two-year goals. But despite the middle ages being the time of most financial pressure, as in Spring 2012, 35 is still considered the best age to be. It is the time when people feel they will or have had the most self-confidence and happiest personal life.

The report also reveals the ideal age to achieve other key life goals:

18 – Get first job
21 – Buy first car
21 – Move out of parents home
21 – Start saving for a pension
25 – Buy first house
27 – Get married or settle with partner
29 – Have first child
39 – Be at peak of career
50 – Pay off mortgage
50 – Have all the children leave home
55 – Become a grandparent
60 – Retirement

The key goals in life
It’s clear that some of the key goals in life may well be more achievable than others, certainly buying your first home at 25 and paying off the mortgage by 50 could be goals that will become less achievable as the family budget gets even tighter.

But there is an emerging trend that shows the younger age groups are now considering financial planning more than they previously were, with over a third (38 per cent) rating saving regularly as one of their top goals. This is clearly a wise move as they enter adulthood with more economic constraints than ever before.

(SOURCE DATA)
[1] The Times of Our Lives report is based on interviews conducted with 2,316 adults by Opinion Matters between 8 and 22 August 2012.
[2] Aviva data 2012.