The Formidable 40s: High earning, high spending Generation X are largest contributors to UK economy

UK, 23 August, 2018: A new study from Experian reveals Brits in their early 40s are the most influential consumers in the UK – earning, spending, and contributing more than any other demographic.

The inaugural Spending Power Index shows people aged between 41-45 have consistently contributed more to the UK economy - owing to myriad factors including a peaking career, a burgeoning family life, and the shifting priorities that come with age.

Pay Day Power

Experian’s Index highlights that The Formidable 40s will be the highest earners in terms of both gross and net income in 2018, making £1,107.11 and £873.35 a week respectively. This category has dominated the highest earning segment for the past six years.

The net incomes of this sub-section are forecast to grow by the highest percentage of all age groups in 2019 - at 3.2%. In gross income, too, their 2.9% growth will be matched only by the age categories immediately adjacent - the 36-40s and 46-50s.

Furthermore, the early 40s are the only category set to out-earn entrepreneurial Millennials in terms of average self-employment income, making £155.09 per household, per week compared to an average £127.57 across the Millennial age ranges in 2019. This income is supplementary to other income sources, such as salary and benefits.

*Self-employment income across demographics (2017-2018) (£’s, per household, per week)

Spending Power

Based on spending alone, 41- 45-year-olds spend the most of any demographic, expected to part with £785.64 a week in 2019. However, it’s where this money is being spent which is most interesting.  

Those in their early 40s spend more on lifestyle and holidays than anyone else - even Millennials - as they’re set to spend £130.72 per week on lifestyle this year and have been the biggest spenders in this category since 2013, with the number increasing year on year. When it comes to holiday spending alone, this group was the highest spending sub-section across every year since 2013 - and in 2019 they are forecast to be the fastest growing, too.

These figures demonstrate a demographic that has reached ‘peak spending power’, experiencing an unprecedented level of financial freedom unmatched by the rest of the UK population that sees them splashing out on the nicer things in life.

*Lifestyle spending per week (2017-2018) (£’s, per household, per week)

*Holiday spending per week (2017-2018) (£’s, per household, per week)

Contributing Power

While there is a clear link between earnings and contribution to the economy, the 41-45 age bracket are contributing more in Tax and National Insurance than any other segment. And, as with earnings, this has been the case in every year of our study - from 2013 right up until 2018.

This means they are not only pulling in the biggest salaries and making the most self-employment income - but also have arguably the biggest stake in society more generally, too.

This category is also contributing more than anyone else in the more prosaic - but nonetheless crucial - areas of spending like transport, housing and education. And, in fact, it is these areas that are arguably making the biggest contribution - as they have led spending in these sectors for the past five years.  

Amir Goshtai, MD of Experian Partnerships & Propositions comments: “Our inaugural Spending Index shows how we are using our insights to draw out key spending trends across generations.

“We found that the early Generation Xers are by far the most influential group in the UK in terms of earnings, spending, and tax contributions. It may not feel like it at times, especially for those who are parents with young children with mortgage payments to keep up. But in some ways these factors might actually contribute further to this age bracket’s position as the most powerful cohort in the country.”

Sustained Power?

Despite the current figures, this segment’s spending growth, at 2.6%, is not the highest - as there are four other age brackets registering marginally higher growth going into 2019 (18-25s, 26-30s, 46-50s and 56-60s will grow at 2.7%).

In fact, there are some signs that suggest this powerhouse cohort might be slowing down. Despite those in their early 40s contributing the most to pillars of the economy like transport and education, spending of some other age brackets - particularly Generation Z - is growing at a faster rate in these areas. 

In transport, we predict the 41-45s will see 1.9% spending growth in 2019, compared with 2.1% for the 18-25s; and in housing their spending will grow by 3%, whereas the 18-25s will see theirs grow by 3.5%.

ENDS

Notes to Editors

Further Information (Expanded Tables)

*Self-employment income across demographics (2013-2019) (£’s, per household, per week)

*Lifestyle spending per week (2013-2018) (£’s, per household, per week)

*Holiday spending per week (2013-2018) (£’s, per household, per week)

Methodology
Experian has used its proprietary consumer insight system, FSS, as the foundation for the model. FSS is built from a range of publicly and commercially available sources, such as the edited Electoral Roll, the UK Census and permission-based market research data taken, for example, from the lifestyle questionnaires that consumers complete. This information is used to split the UK population into different groups based on likely shared characteristics. This data is nominal (e.g. not adjusted for inflation), and based on income/spending per household, per week.  

The income and spending information from FSS has then been broken down into more detail by Experian’s expert team of in-house economists, and combined with our UK Macro analysis model and the ONS Living Costs and Food Survey to deliver the insights in this report.

Contact Details
Rajan Lakhani, Head of Consumer PR & Content – Experian
+44 (0) 203 042 4681
Rajan.Lakhani@experian.com

About Experian

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