Over the past two years, 28 per cent more people between the ages of 25 and 74 have started to save for retirement and over half reported feeling positive about their financial future, but those savings are still not enough, particularly among ‘millennials’. Those aged between 25 and 34 wish to have an income of £27,000 annually and believe that a pot of £167,000 will get them there, as opposed to the £540,000 needed in reality.
More realistic expectations for savings and life expectancy need to be set by young people. Millennials expect to live to 79, when in reality one in five will live to 100 years old. The average 30-year-old will live to 90.
Alex Hoctor-Duncan, head of retail, EMEA at BlackRock, said, “By 2035, Millennials stand to be the first generation worse off than their parent. They’ve got to multi-task their money in a way that no other generation has had to do in the past.”
Mr Hoctor-Duncan said that he feels positive that millennials will be able to adapt to being both investors as well as savers, reminding them that it does not have to be an “all or nothing” scenario, and encouraging them to pay off any debts while interest rates are low.
“There almost needs to be period of less change to give people time to adjust,” Mr Hoctor-Duncan continued. He pointed to ongoing education, particularly during the time that young people are taking out student loans, and easy-to-understand material explaining investments to help them understand ways to deal with the financial burdens in British society they are due to inherit.
UK savers are overall more positive about their financial futures, thanks to an improving UK economy, low inflation, and a healthier job market. Despite this, Britons are less confident when making savings and investment decisions, with 49 per cent reporting confidence compared with 52 per cent last year. Confidence is especially low amount women and those aged between 45 and 54.
Raising awareness of the pensions freedoms has been largely successful, but the target market has largely remained cautious. Of those over age 55, 72 per cent are aware of the changes that have been made to pension rules, but 78 per cent have not yet taken any action.