‘Generation Y’ expect to retire with pension pots of around £100,000 despite only contributing £22 a month to their pension, new data has revealed.
A poll of 2,002 UK adults between the ages of 18 to 35-years-old by Censuswide, on behalf of Now: Pensions, found that this group expect to retire with pension pots of around £100,000 despite more than half of them admitting they have not started actually saving yet.
Of those that are saving, the average amount being set aside each month is £22.
If contributions continued at this level, it would deliver a pension pot of £18,000 over 30 years of saving and £56,500 over 40 years of saving, assuming 5 per cent annual investment growth.
The survey found men are expecting £111,000 when they retire and women expecting £82,000.
However, 58 per cent admitted they have not begun saving yet, while 65 per cent are not contributing to a workplace pension.
When presented with information about how much would potentially come out of their pay packet each month, only 31 per cent said they could afford to save, while 44 per cent said they could not afford the contribution now but will be able to in future.
The average salary young people said they would need to earn in order to be able to afford to make a pension contribution is £26,836.
To achieve a pension pot of around £100,000 savers would need to set aside about £120 each month if they saved over 30 years and £70 if they saved over 40 years, again assuming 5 per cent a year investment growth.
If used to buy an annuity at retirement, a £100,000 pension pot would buy a fixed income of between £5,000 and £6,000 a year.
Morten Nilsson, chief executive of Now: Pensions, commented that while auto-enrolment will go a long way to getting young people into the savings habit, the sooner they start saving and the more they set aside each month, the easier it will be.
He said: “While a £100,000 pension pot seems like a healthy amount, men aged 25 today are likely to live until they are 88 and women are likely to live until they are 91, which means that this pot has to fund around two decades of retirement.”