Aegon calls for “easier-to-understand” investment products from the private sector, warning future retirement shortfalls among employed young adults between the ages of 20 and 29 will be likely due to a lack of opportunity to save, rather than a lack of will.
Aegon’s new research found working adults between the ages of 20 and 29 expect to be worse off financially in retirement than their parents (59 per cent), and take on more financial responsibility, including funding their own retirement.
Additionally, 37 per cent believe they will likely fall short of their retirement needs, including 27 per cent who believe their shortfall will be at least half of what they estimate they will need.
As a result, 44 are pessimistic they will not be able to choose when to retire, “a luxury enjoyed by many of their parents”, Aegon said.
Another factor is the financial impact of caring for the older generation, with 28 per cent expecting to provide financial support for retired parents, and 40 per cent agreeing that “adult children of retirees should help provide financial support for their parents if needed”.
The research found while young employees are prepared to take responsibility for their financial future, they also require the support of employers, retirement providers and governments to help meet their retirement goals.
Aegon says initiatives that would make a difference include ensuring financial information is straightforward and user-friendly, financial products meet modern lifestyles, more generous tax breaks on long-term savings, retirement plans and employer benefits.
Meanwhile, “easier-to-understand” investment products from the private sector would increase young peoples’ propensity to save, Aegon stated.
There is also a leading role for government to play through the creation of stable long-term financial and taxation policy, Aegon said.
The sample comprised of 10,800 employees, including 2,722 people between the ages of 20 and 29, and 1,200 retirees.
Angela Seymour-Jackson, managing director of workplace solutions at Aegon UK, said: “Our latest study gives cause for optimism as this younger generation are prepared to take responsibility for their financial future.
“Twenty-somethings have the ability to create the retirement they want. Auto-enrolment will be a key first step, but will only be a success if savers continue down that path gaining more understanding of the financial choices available to them and investing enough to create the retirement they want. Engagement is absolutely vital and these younger respondents appear to be up for the challenge that lies ahead.
“Young employees are asking for help from employers, the government and our industry. They’re looking for financial information that is straightforward and user-friendly, flexible financial products that meet modern lifestyles, more generous tax breaks on long-term savings and retirement plans, and more benefits from employers who are engaged in retirement initiatives.”