A BlackRock survey shows that millennials believe that they will need £167,000 pension pot when retiring in order to allow for an income of £27,000 per year when they will actually need £540,000.
Researchers from BlackRock polled 840 people in July and August and found 20 per cent of millennials predict they will live until 79, when it is likely they will live to see 100.
Tony Stenning, savings and investments expert at BlackRock, said: “Retirement is a priority for one in four young people, but the goal of being a home-owner means it falls behind in their list of priorities.”
Saving towards property ownership is considered the highest priority among millennials with 30 per cent having concerns that housing costs could pose a risk to their financial future.
Despite this, 22 per cent said they would take equity out of their home to move to a smaller property if their retirement income turned out to be less than expected.
The survey also highlighted that while millennials believe 25 to be the optimum age to start saving for retirement, 48 per cent of them have not started with 21 per cent having no savings at all.
Alex Hoctor-Duncan, investment and savings expert at BlackRock, said: “The survey shows that millenials completely separate saving and investment from debts.
“In some ways it is not surprising as technology has made it easier than ever before to buy now and worry about the consequences later.
“Without a doubt, the biggest challenge that this group faces is multi-tasking their finances.
“A good place to start is to have a plan for their savings, investments and their debts. Millennials are the first generation that will have to rely not only on their finances, but the way they manage them.”