Younger workers saving ‘aggressively’ for retirement

Younger workers are much more money-minded than people might expect and are saving aggressively to achieve an ambitious retirement, according to a new report. Royal London’s ‘Workplace Pensions: Are they working hard enough?’ reveals generational disparities in retirement planning. The divide is clear when looking at how much each age group is putting into their pension pots per month. Workers aged 18-34 are contributing, on average, £274.50 to their pension each month – almost 10% of their wage, based on the UK average salary for that age group, and almost twice as much as older workers. They are also more likely to be taking advantage of employer-matching contributions (51%) compared to those aged 50 and above (38%) and they are more proactive in managing their pots – with only 10% of those aged 18-34 having never checked how much their pensions are worth. Younger workers believe they will need £45,000 a year for a good retirement – more than any other age group predicted – and more than the amount needed for a single person to live a ‘comfortable’ lifestyle in retirement according to the Pension and Lifetime Savings Association. In fact, that is more than needed by a couple to live a ‘moderate’ lifestyle which would grant financial security and flexibility, allow one foreign holiday a year, and even accounts for £1,000 to support family members such as by paying for grandchildren activities. On the other hand, those aged 50 and above expect to need just £25,000 – £35,000 a year but recognise that would result in them having to be more frugal. Clare Moffat, pensions expert at Royal London said: “Contributions vary widely across genders, income, age and if someone works full or part-time. In general, those who are lower paid – often women, older employees and part-time workers – tend to pay less into their pensions and the fact they are paid a lower salary also means less is contributed into their pot from their employers.” She pointed out that younger workers have lower overall outgoings meaning they could have more disposable income to channel into their pension pots. Ms Moffat said: “I have never met anyone who said that they wish they had paid less into their pension. It’s also not surprising that around a third of people from our research wished they’d saved more for retirement, could save more now or had saved into their pension earlier.” Research carried out by Opinium between 31 July and 5 August with 3,693 UK workers with a workplace pension. Average median salary for 18-34 year olds was £34,999 per annum.

Younger workers saving ‘aggressively’ for retirement

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