The number of people making regular ‘everyday’ payments rises significantly among those aged 25 to 34, compared to those aged 18 to 24, highlighting the additional financial demands of growing up, according to new research from Standard Life, part of Phoenix Group.
Standard Life’s Retirement Voice study shows that just a third (34%) of 18- to 24-year-olds currently pay utility bills, but this doubles to 68% among 25- to 34-year-olds.
Similarly, 45% of 18- to 24-year-olds pay for their internet usage, rising to 70% of 25- to 34-year-olds.
Standard Life’s research also shows that these regular payments continue as people reach retirement age or stop working.
Nine in 10 65- to 80-year-olds, either still in work or retired, pay internet (87%), utility (90%), council tax bills (91%) and TV licence (90%), as well as 82% paying for their phone contract.
Dean Butler, managing director for customer at Standard Life, said: “There’s a lot going for being in your mid-late twenties, when the freedom and excitement of living under your own steam tends to begin, however it’s also the time when the reality of paying regular bills hits.
“As such there’s a very sudden jump in the average number of people reporting regular payments when they are 25 to 34 years old, compared to the ages of 18 to 24.
“Not all these payments can be said to be ‘essential’, however the big hitters are, and for people in the early stages of their careers it can be a real challenge to stretch entry-level salaries to cover these recurring expenses let alone think about making contributions towards savings such as pensions and investment accounts.”
He continued: “As a result, the financial pressure on younger households can be tough, and can come as a bit of a shock.
“As most of these costs will continue throughout your lifetime and into retirement, it’s important to get into a good habit of managing your regular payments.
“This can feel difficult when you’re first hit with an increase in bills, and especially now, when the cost of living is high. Taking time to budget accordingly, seeing whether you can reduce any regular costs by switching providers or finding a better deal, and setting goals for future can help tackle the financial strain.”
Butler added: “It’s also beneficial to start contributing to your pensions from as early an age as possible, if your finances allow it.
“Our analysis finds that those who begin working on a salary of £25,000 per year and pay the standard monthly auto-enrolment contributions (3% employee, 5% employer) from the age of 22, would have a total retirement fund of £434,000 by the age of 66.
“However, waiting just five years to start contributing to a pension, beginning payments at the age of 27, would result in a total pot of £320,000– £114,000 less.”
