PENSIONS WARNING – Millenials And Gen Z FAILING to Prepare For Retirement

Brits aged 18-40 are failing to prioritise their pensions, instead investing their hard-earned cash in dream holidays, material goods and property, according to the latest data from money.co.uk.

The new report, which analyses the different money priorities for each generation, has revealed that only Gen X savers (aged 41-56) view pension plans as one of their top three financial priorities.

Despite being the biggest savers, Brits falling into the Gen Z category (18-24), say that their biggest financial priority is saving for a home, followed by money to spend on material goods, and saving for a dream holiday.

When it comes to Millennials, holidays are the single biggest priority, with almost 40% of 25-40 year olds saying it was their primary financial focus, followed by money for material goods and saving for a home.

According to top financial experts, prioritising an experience or saving for a home is gratifying in the short to medium term – yet failing to invest properly in a pension will result in difficulty later in life.

James Andrews, personal finance editor at money.co.uk, said: “Everyone’s financial situation is different, but the earlier you start paying into a pension, the better result you’ll get at retirement.

“That’s because if you don’t start saving until you’re older, you’ll need to put far more away to catch up – as the money has less time to grow.

“Once you pass the automatic enrolment earnings threshold (currently £10,000 a year or £192 a week) 5% of your pre-tax salary goes straight into your pension to be topped up by your employer, unless you actively opt out or your firm has a more generous scheme in place.

“But while that might make some younger workers feel secure, remember that every extra pound you save a month in your 20s and 30s can be worth hundreds by the time you retire – but the later you leave it the less time that money has to grow.

“When it comes to staying on top of your work or private pension, your provider will send you a statement each year that details the funds you have built up – along with a projection of what this will be worth at your nominated retirement age.”

“If you want more of an idea of how much you should be putting into your pension, or how much larger contributions now would add to your final pot, use a pension contribution calculator. This will show you what your pension is likely to be worth at retirement, based on what you’re saving now and how much is already there.”

As well as a divide in how each generation prioritises pensions, there’s also a disconnect between how much each generation choses to contribute.

Overall, Millennials are the least likely to make additional contributions on top of their auto enrolled amount, with Gen X savers being the most likely to overpay.

The one thing Brits do agree on, is that the average amount needed for a comfortable retirement is £22,500.

Here’s an overview of how each generation manages their pensions plan:

James Andrews, personal finance editor at money.co.uk, continued: “If you want more of an idea of how much you should be putting into your pension, or how much larger contributions now would add to your final pot, use a pension contribution calculator.

“This will show you what your pension is likely to be worth at retirement, based on what you’re saving now and how much is already there.

“If you’re unsure as to which pension plan is the right one for you, compare the latest deals at: https://www.money.co.uk/pensions.htm“