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- More than half of workers under 27 have stopped saving for old age at some point
According to research, more than half of Gen Z workers have stopped contributing to their pension during their short careers because they struggle to cover their daily expenses.
About 21 percent of young people said they are not currently saving anything for retirement, according to data from recruiting firm Robert Walters, while 51 percent have paused their contributions at some point.
Generation Z is between 12 and 27 years old and a significant number of them are employed. The older ones may have been working full-time for about a decade.
Procrastination: One-fifth of Gen Z professionals are not saving anything for retirement
Of those who contribute to their pension, 31 percent receive only the legal minimum contribution from their employer.
Typically this is 3 percent, and in that scenario the employee must contribute 5 percent to complete the total minimum contribution of 8 percent.
By comparison, nearly half of Gen Xers (those ages 44 to 59) receive contributions of between 7% and 10% from their employer alone.
One suggestion for how much you should save is to divide the age at which you started saving for your pension by two to calculate the percentage of your salary that goes towards your pension each year.
This means that someone starting at age 24 would save 12 percent in total, including their employer’s contribution, compared with the minimum contribution of eight percent.
However, this could be a difficult task for those who have lower incomes and only receive the minimum from their employer.
Unsurprisingly, as the generation approaches retirement, Gen Xers are increasingly focused on pension savings – three-quarters consider their pension contributions a priority.
Chris Eldridge, managing director of Robert Walters UK and Ireland, said: ‘Pensions are not something you should only start thinking about when you approach retirement age – you should start putting something aside from your first day of professional employment.
‘Young professionals who neglect their pension contributions now could see their retirement postponed later in life due to insufficient savings.’
With a single person needing an average base salary of £43,000 a year over their career to retire comfortably, saving for retirement is more important than ever.
But rent and living costs are rising faster than wages, meaning saving for retirement is also becoming more difficult, especially for young people.
Data from the Institute for Fiscal Studies show that between five and seven million people are on track to see their pensions fall short of financing their minimum standard of living.
Eldridge said: ‘Overall, Gen Z professionals have spent the least time in the workforce and typically have the least money saved for retirement. However, many are already setting aside their savings to meet their daily expenses.
‘Professionals under 30 are at a crucial point in their careers to build a solid foundation for their pension pot. But as our research suggests, many don’t have the opportunity to do so with their current employer.’
Not surprisingly, younger workers are also less likely to be eligible for higher pension contributions, many of which are offered by companies based on an employee’s length of service.
Only 23 percent of Gen Z professionals receive contributions of between seven and ten percent of the work.
Eldridge said: “Not only are Gen Zers more likely to earn less, they are also less likely to be eligible for financial benefits that supplement their base salary, making it even harder for them to set aside savings for the future.”
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