Millennials are often thought of as being bad with money, yet research from Close Brothers and the Pensions and Lifetime Savings Association (PLSA) shows that this may be unwarranted, as this age group actually saves more each month in non-pension savings accounts than other generations.
The figures show that millennials are saving £3,445 per year on average, or £287 per month, and that's on top of their workplace pension savings. In contrast, those aged 55+ save £259 per month (£3,108 per year), while 35-54 year-olds put aside the least at just £256 per month (£3,072 a year). This means that millennials save almost £400 more per year than their Generation X counterparts, putting paid to rumours that younger workers choose to spend rather than save.
However, there are clear differences when it comes to what each age group is actually saving for. Those in the youngest age bracket prioritise saving for short-term events such as holidays (34%), big ticket purchases (13%) or paying down debt (25%), while 33% are prioritising a house purchase. In contrast, saving to secure a desired lifestyle in retirement is a priority for just 20%, whereas it tops the list of savings priorities among those aged 35-54 (34%) and those aged 55+ (50%).
Yet much of this could be because they don't have the necessary support to think long-term, with 44% of millennials surveyed believing that the savings landscape is confusing and that they need guidance to ensure they pick the best product for their needs. This is perhaps highlighted by the low take-up of the Lifetime ISA (LISA), with only 4% of 18-34 year-olds having opened such an account, despite it being created with their needs in mind.
Of the 41% who said that they would either be unlikely to open a LISA in the future or didn't know if they would or not, 64% said that lack of information was a main reason, so it's clear that this age group needs further support to take advantage of such schemes.
"Millennials are often a prime media target when looking at poor savings habits, but as this research shows, despite being the workplace generation that earns the least, they save the most," said Jeanette Makings, head of Financial Education at Close Brothers.
"They also have a great advantage when it comes to long-term saving; they are potentially looking at 50+ years of saving and 65+ years of investment performance – a timeframe no other generation can match. But their difficulty is in balancing the shorter-term goals such as a house deposit with longer terms ones such as retirement."
She added that, while there were a whole range of savings providers and products on the market, "none of this is any use unless individual savers have the tools to manage their different savings priorities, find suitable savings solutions and know where to go for help when they need it".
As such, she's calling on the Government and employers to help ensure that employees know the best ways to achieve their savings goals, saying that "by developing comprehensive and targeted guidance in the workplace, employers can build a financially secure, happier, and more productive workforce". Nigel Peaple of the PLSA reiterates this, saying that "the industry and Government must do more to de-mystify savings and make it more accessible to the millennial generation".
However, it isn't only millennials who need support to save for the long term. Jeanette said that "the generation of most concern is the 35-54 year olds who, without the cushion of a defined benefit pension like the generation before them, and without the time to build up their long-term savings, like millennials, there is the increased risk of them being unprepared for retirement".
So what can you do if you're in any one of these age groups and need to start thinking about the future? Well, the key is to get started! You're only going to stand a chance of being prepared for retirement if you've got a suitable savings pot behind you, and that means saving as much as you can from as early as possible into a dedicated savings account.
Even if you've got short-term goals, you should always keep long-term ambitions in the back of your mind, and that could mean having several different pots to meet your various ambitions. You of course need to make sure that you're saving into a workplace pension, thereby benefiting from employer contributions and tax relief, but you may want to look to other vehicles too.
The Lifetime ISA, for example, has been specifically designed to be used for a house deposit or retirement, and given that you get a 25% top-up on anything you save (up to the annual allowance of £4,000), it makes sense to consider it.
If you don't meet the criteria, a traditional cash or stocks and shares ISA could still be worth considering, or if you've got a lump sum that you want to keep out of arm's reach, a fixed rate bond is ideal. You'll need an easy access account for an emergency fund too, and you may even want a regular savings account to really get into the habit of saving and build up your pot for the future.
Whatever your savings goals, find the best savings rates to get started.
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.