Millennials face working a decade past retirement age

Millennials face working a decade past retirement age

Millennials will have to work until they are 77 if they want to retire in comfort, a report by giffgaff has claimed.

A survey of 1,179 people, conducted by financial literacy website giffgaff money, found millennials were only able to save £103 a month, or £1,236 a year.

Assuming a comfortable retirement requires an income of 70 per cent of income during working life, giffgaff claimed that would leave people only five years of income in retirement.

With current life expectancy at 82, that would mean millennials would have to work until they were 77.

The report also found that 49 per cent of millennials - classed as those born between 1980 and 2000 - felt they were unable to pay into a pension at all.

People in this group said they could only save an average of £40 a month.

Almost a third of respondents said they had a workplace pension but were only able to pay in the minimum percentage into it.

Current auto-enrolment rules require members to pay at least 1 per cent of their income into a workplace scheme (although they are free to opt out altogether).

Richard Apletree, managing director at giffgaff money, said: "It’s a shame to see the financial difficulties of younger workers not only affecting their ability save for the near future, but also forcing them to work long into their retirement years.

"While some younger people are able to make the minimum contributions to their workplace pension, greater investments often reap generous benefits.

"By hindering their ability to build a solid foundation, the long-term retirement goals of young people can suffer immediate setbacks," he said.

The research comes the same week that John Cridland published the recommendations of his year-long review of the state pension age.

His headline recommendation was that the government should accelerate the timetable for raising the state pension age to 68.

If the government follows this recommendation, the state pension age would reach 68 between 2037 and 2039.

The final report also cleared the way for state pension to be raised by up to one year every decade, in line with improvements in longevity, meaning most millennials would not reach state pension age until age 70.

Keith Richards, chief executive of the Personal Finance Society, said the implications of increasing longevity was a "train crash waiting to happen", and urged the government to act quickly.

He said Mr Cridland's recommendations were "disturbing but broadly pragmatic".

"Without action, we are facing the prospect of severe levels of poverty in later life, and it is time that pensions regulation is considered in the context of long-term social and economic trends rather than treated as a political football.