The average British adult has only SEVEN years of complete financial freedom, it has been revealed. New research by Skipton Building Society shows that adults have a ‘window of wealth’ between age 58 and age 65.
This is the point at which most people have stopped paying off debts and their children have left home and are financially independent- there will still be a few years of earning left before retirement, at which point income can reduce again for many.
Three quarters of the 1,000 people over 55 polled claimed they had very little disposable income during their twenties, thirties and forties.
During this time, most money went towards paying the bills, supporting the children, payments towards the mortgage or rent and loans.
However, four in 10 anticipate being richer towards the tail end of their career as they finally start to enjoy their hard earned cash.
Skipton’s Head of Corporate Communications, Tracy Fletcher, said:
“This study offers a glimmer of hope for those hard working young people who are currently strapped for cash and can’t see light at the end of the tunnel.
“As an adult there will be financial commitments throughout your working life, but you can get to the point, albeit potentially quite brief, where things ease up and you finally have a little money to spend on yourself.
“The mid to late fifties can be the point where you stop forking out for your children’s education, cars, weddings and rent.
“If you are tied into a 25 year mortgage this might also be the time when you’ve cleared the balance.
“But our findings also highlight the fact that, particularly in the current climate, it’s more important than ever for people to get on top of their finances when they are younger, in order to boost their chances of achieving more comfortable later years.”
The study shows the average 55-year old embarked on their first full time job at age 18, settled down with a partner by 24 and started a family two years later.
A house was purchased at age 27 and the mortgage finally cleared by age 53.
By the age of 52, the children finally flew the nest for good, and their parents stopped supporting them a year later.
The average respondent reckons all their debts – loans, credit cards and store cards – will be cleared by age 58, and they intend to retire at 65.
When asked how they intend to spend their money during their ‘window of wealth’, six in 10 plan to go on holiday, while 45% will spend more money on doing up the house.
A further three in 10 would like to eat out more, while 22% will focus on socialising with friends.
The survey shows that more than half of those polled DID save during their twenties, thirties and forties, despite other financial commitments.
The average person managed to save a healthy £20,335 by the age of 50, but 61% still wish they had saved more by this point.
Only 3% of people over the age of 55 are currently supporting elderly relatives, and those who are helping out financially anticipate doing so until they turn 65.
Tracy continued:
“The 1,000 adults we polled have been relatively sensible with the spending and savings habits over the past 30 or 40 years, but despite this are left with just a small window of spending at the end of it all.
“There is a clear message that regardless of there being a time at which you might not have so many financial commitments, it is imperative that you start saving as early as possible to help prepare for a more comfortable future.
“And there is always the chance that by making sensible financial decisions, this window of wealth can be extended into the retirement years.”
