Home Money Millennials and Gen X LESS likely to have a grasp on pensions than Gen Z

Millennials and Gen X LESS likely to have a grasp on pensions than Gen Z

by Elijah
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Pension funds: fears many UK workers are not saving enough money for retirement

Generation Z is more likely to care about their pensions than Millennials and Generation X, with more than a third of people aged 35 to 54 admitting they don’t care about their retirement savings.

According to data from InvestEngine, 64 per cent of people aged 18 to 34 said they were committed to their pension, while 70 per cent of people aged 55 and over reported taking interest in their savings.

That figure fell to 58 per cent among people in the 35 to 55 age group, who often face other life commitments and milestones that divert their attention from pension savings. Buying a home and having children takes your finances away from your retirement fund.

Pension funds: fears many UK workers are not saving enough money for retirement

Although many are likely to pay into a pension under the automatic enrollment scheme, if they don’t commit to their fund they could be missing out on higher contribution matching opportunities offered by their employers.

People also run the risk of forgetting about certain pension funds when it comes to collecting their pension.

Andrew Prosser, chief investment officer at InvestEngine, said: “While auto-enrollment has certainly been a huge success in reversing the decline in workplace savings, it has arguably exacerbated this lack of engagement we are experiencing. seeing today, particularly among middle-aged adults.

“In fact, this group needs to be more committed, as the later they leave, the less time they have to benefit from any potential return on their pension investments.” His company surveyed 4,000 adults across the UK.

By not saving now, Millennials and Generation X are likely to face problems in the future. Data from the Department for Work and Pensions indicates that 38 per cent of the UK workforce, or 12.5 million people, are not saving enough money for retirement.

However, cutting your pension contributions is not always done out of ignorance. More often than not, the realities of life simply get in our way.

Sean Cope, 36, reduced his pension contributions before buying a flat last year and instead used the extra money to maximize his deposit.

“After using all my savings, I didn’t really have much left and then I had to do some renovations on the apartment, so I was just looking to cut costs as much as possible,” Sean told This is Money.

Before getting on the housing ladder, Sean had increased his pension contributions, having previously been self-employed for five years.

‘For about a year or eighteen months I actively paid above the automatic enrollment contribution, but before that I was not fully committed. “I have no idea where the previous boats are from previous roles in the last 10 years, I still don’t know where some of them are,” he said.

‘This year’s financial priority is simply paying off my credit card. I’m trying to clear all that up and have a blank slate, then I can start planning a little more for the future.

“Given that I have about 30 years of work left to pay my pension, I hope that will be enough to complete the contribution.”

According to data from wealth management company Saltus, 79 per cent of grandparents provide their adult grandchildren with financial support of £11,000 a year on average, to help with rent, mortgages, higher education and other bills.

As a result of offering this support, 14 per cent of grandparents have reduced their own pension contributions.

Mike Stimpson, partner at Saltus, said: “It is difficult to know how long this level of support will last, or whether it will become more common as the cost of living crisis continues to take its toll, but it certainly highlights the importance of financial planning for ensuring your money goes further when you need it most.’

Research from Resource Solutions shows that Generation Z is the generation most worried about retirement, with 72 per cent of young adults worried they won’t be able to stop working at state pension age due to their finances.

About 70 percent of Millennials also reported having similar concerns.

The fears arise as a study by the International Longevity Center suggests the UK will need to raise its retirement age to 71 from the current 66 by 2050 to maintain the current number of workers per state pensioner.

Andrew Prosser of InvestEngine said: “The idea of ​​retirement can often seem too distant to prioritize for many young and middle-aged adults, particularly during such difficult economic times, but the risks of not jumping in early can be significant. ‘

Work longer: International Longevity Center research shows retirement age may need to be raised to 71 by 2050

Work longer: International Longevity Center research shows retirement age may need to be raised to 71 by 2050

However, for Leo Hodges, 24, his future savings are a priority.

Leo was interested in saving while in college, where he faced a tighter budget while living off a student loan.

“If I could keep track as much as possible, I could still have a lot of fun, going out and dining and all that, and at the same time save a little bit for important things like vacations or for the future,” he said. she said This is money.

Now, by paying a pension, you capitalize your company’s pension plan, contributing an additional percentage of your income each time you receive a salary increase, which your employer then matches.

‘I can fit that into the life I want to have, I can go out with my friends and all that, but still add that one percent every time I get a raise.

“I try to add unique contributions every month,” he added. ‘I have a spreadsheet where I track all my expenses and income, so at the end of the month I can see if I have £400 or £100 left over. So I can base my contribution on that.

‘I think all that data and those statistics (about the current cost of living) push you one way or the other. It’s either “I’m never going to afford it, so what’s the point?”, or “that’s a horrible statistic, I’m going to have to brace myself and create a tragic spreadsheet that all my friends laugh at.”

On the other hand, Dr Nisha Prakash from the University of East London said: “In general, Generation Z are soft savers. They prefer to spend on accumulating experiences rather than saving for retirement.

Last year, Jen Tait set up Rise Lettings Group to invest in property ahead of her retirement.

Last year, Jen Tait set up Rise Lettings Group to invest in property ahead of her retirement.

‘However, the pandemic had a significant change in how Generation Z and millennials perceive the usefulness of money. With lockdowns confining families inside their homes, young adults were exposed to the dangers of having little savings amid economic uncertainty.

‘I’m not sure if this trend will continue even after the economy stabilizes. I believe that once growth begins, the attention of young wage earners will once again focus on consumption.’

Of course, paying into a pension isn’t the only way to save for retirement. Jen Tait, 41, hasn’t paid a pension since 2010, but not for lack of interest in building a future for herself and her children.

Jen, director of her own company, Rise Learning Group, said: “It’s not so much that I don’t mind them, but more that I don’t trust pension schemes. They create a finite pot of money that will be depleted as you draw it down.

“On the other hand, investing in properties means that the value of the pot will continue to increase and I will make money from the rentals of these properties and the value of the pot will continue to grow.”

Last year, Jen started a rental company and when she turned 40, she was “prompted” to act on the interest she had always had in property.

“I wouldn’t be surprised if many self-employed people haven’t thought about their pension or don’t pay it,” he added. “I think most self-employed people will have an alternative pension plan or no plan at all.”

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