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Millennials saving for retirement

Millennials saving for retirement

Category: Retirement

Updated: 06/06/2016
First Published: 06/06/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The general assumption that younger workers aren't concerned about saving for the future appears to be unfounded, with recent research from PensionBee finding that just 7% of those aged 25-44 would rather spend their money than save into a pension.

However, despite the good intentions of the majority, many are anxious about what the future could hold, with around a third (32%) admitting they were worried about retirement and fear that they won't be able to live comfortably in their golden years. Indeed, many are relying on the Government, with just a third of respondents being aware that the state pension may not be sufficient for the retirement they hope for.

But that isn't the only thing they're concerned about, with a particular source of uncertainty being how much money to save. In fact, the research found that 30% of respondents were unaware of how much they should be saving into their pension, compared with only 8% of those aged 55+.

How much do I need?

The amount of money you'll need to save will depend on your retirement aspirations, but if you're hoping to retire on the same kind of income you enjoy during your working life, you may be disappointed.

For example, the Chartered Institute for Securities and Investments has calculated that those in their 20s would need to save around £800 a month for 40 years in order to retire with an annual income of £30,000 – does this sound like something you'd be able to achieve?

For many, the thought of retiring with a decent income is the Holy Grail, but at the same time, being able to save that much into a pension is essentially unachievable for those on average incomes.

Take control

Happily, however, there's a clear desire for millennials to take control of their retirement aspirations and eventual income, with the aforementioned figure of just 7% preferring to spend their money offering definite encouragement for the future.

Something as simple as improved communication could encourage even more people to save, too, with 21% saying they currently find it difficult to get clear and trustworthy information on pensions.

"It's clear from these results that millennials are concerned about their retirement, but when it comes to pension saving there's a real gap between perception and reality," said Romi Savova, CEO of PensionBee.

"We need to find innovative ways to encourage saving and start having more realistic and open conversations, otherwise retirement could be very difficult for those reaching pension age in the next 20 to 40 years."

What next?

Knowing exactly how much you'll need for retirement can be difficult to fathom, and it can't be denied that building a significant pension pot can be a daunting task, too. But don't let that put you off – saving as much as you can from as early as possible is vital if you want to have a comfortable retirement, so start the process by finding out more about workplace pensions and automatic enrolment, and consider boosting your future reserves by saving into an ISA, too.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.