How Wikipedia defines it
“ONE OF SEVERAL terms applied to the current generation of young adults in Western culture. They are so named for the frequency with which they choose to cohabitate with their parents after a brief period of living on their own – thus boomeranging back to their place of origin. This cohabitation can take many forms, ranging from situations that mirror the high dependency of pre-adulthood to highly independent, separate household arrangements.” structure was creating an additional problem. “For too long SA’s savings rates have been significantly lower than its economic and structural characteristics permit. We’re missing out on the savings dividend that should result from having a large workforce relative to the retired population – not least because the high rates of youth unemployment means the dependency ratio isn’t as low as it should be.”
Iain Williamson, MD of retail affluent at Old Mutual, recently noted young savers were a particularly critical area of concern for SA. Said Williamson: “Poor savings habits among young people make them vulnerable to rising prices and unpredicted income changes. Such habits can, and do, affect the ability of young breadwinners to pay deposits for large assets, such as homes, so harming their prospects for wealth accumulation.”
Research Old Mutual conducted of those falling in the 18 to 24 age bracket showed only 37% had started some kind of provident fund and just 21% had medical aid. It could be convincingly argued the need for savings in that age group is perhaps overstated. Provided they aren’t incurring significant debt, the need for a retirement product or medical insurance can probably be offset by some kind of “Do It Yourself” savings mechanism… assuming people actually had the self-discipline to save.
This inability to save is being reflected in a wider generational issue known as “The Boomerang Generation” – a cultural shift that’s seeing increasingly more young people moving back in with their parents. Depending where you look at throughout the Western world, and even in SA, as many as 30% to 50% of the global population is either permanently or semi-permanently living with their parents. While there are some obvious co-habitation benefits that often result in the parents absorbing the costs of their children. Interestingly, data suggests while the younger generation is benefiting, little of that’s translating into a deeper youth savings pool.
Though Finweek often takes some flak for constantly pushing Government’s retail savings bond product, the reality is it’s an important product for SA and its beauty is its simplicity.
Despite that it’s only attracted roughly 77 000 investors and R9,3bn in savings, which is relatively small considering the assets in SA’s collective investment industry and unit trust market come in at almost R1tn. The focus on using products such as this to build a savings culture has been recognised by Gordhan, who says Government is currently looking at a top-up type savings bond to attract smaller investors.