Financial pressure mounts for people in their 30s and 40s

People in their 30s and 40s face the biggest financial pressure of any age group, according to new research from HSBC’s long-running study, The Future of Retirement.
The survey of over 18,000 working age people and retirees across 17 countries found that within this age bracket, 91% of people face household and personal living costs, 69% are financially supporting others and the same proportion are putting money into longer-term savings, while 63% are having to make loan repayments.
Taken together, this shows that those aged between 30 and 49 are facing the greatest pressure on their money, creating a ‘sandwich generation’ of people with financial obligations to those both older and younger than themselves.
This pressure does not relent until people reach their 50s, when many experience a period of affluence. As older children start to leave home, parents are able to reduce their expenditure on others, with significantly fewer (57%) of those aged 50 and above financially supporting others.
The benefits of the ‘empty nest’ can be seen in the rise in the proportion of people in their 50s and above choosing to spend their money on leisure and entertainment (76%), including holidays and trips (56%), as well as in the lower proportion who are repaying loans (50%).
The research also shows that the financial pressures traditionally faced by the sandwich generation of 30 and 40 year olds are now likely to extend to even younger people, with many in their late 20s committing to longer-term saving (63%), but also having to repay borrowing and financially support others (52%).
Crucially, younger people don’t appear to recognise the implications of these financial outgoings and the effect that they could have on their lifestyle in retirement. Nearly half (46%) of working age people aged 25 to 29 are spending on their hobbies, compared to just 36% of those in their fifties enjoying new-found affluence. They also have higher leisure expenses than their older counterparts, with 77% spending money in this way.
Attitudes towards finances play a part in this, with 42% of people in their late 20s saying that they prefer to enjoy life in the present and not worry about the impact this might have in the future. This outlook suggests that this generation could be ill-prepared to cope with the financial burdens that they are likely to face over the coming decades.
The survey also reveals that under a quarter (24%) of people in their late 20s think that being in control of their finances is one of the most important things in life, and many of this age group give little thought to their later lives, with 44% believing that the distant future is too uncertain to plan for.
 “As the ‘sandwich generation’ widens and financial pressures start building on even younger generations, it is important for people of all ages to be aware of their finances and to take a more active role in saving for later life,” says Charlie Nunn, Group Head of Wealth Management.
“Proper preparation will help younger people steer their way through the particularly challenging period of their 30s and 40s and help them avoid the worst of the financial struggles during this crucial time in their lives,” he says.
HSBC’s research identified four actions that people can take to improve their financial well-being in retirement:
1. Consider all your retirement expenses
When planning for retirement, make sure to list all your possible retirement outgoings
2. Start saving earlier for retirement
Plan to start saving for retirement earlier, to help build a bigger fund and allow it to grow for longer
3. Make sure your advice is professional
Seek information from many sources, but make sure the advice you get is professional
4. Be prepared for financial ups and downs
When saving for retirement gets difficult, make sure to review all your finances and seek alternative ways to help you continue towards a comfortable retirement